TOWN OF CARY CAPITAL IMPROVEMENTS BUDGET MESSAGE FOR FISCAL YEAR 2014

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1 TOWN OF CARY CAPITAL IMPROVEMENTS BUDGET MESSAGE FOR FISCAL YEAR 2014 Mayor Weinbrecht and Members of Council: The recommended capital improvements budget for the fiscal year of July 1, 2013 to June 30, 2014, and capital improvements plan for fiscal years 2015 through 2024 for the Town of Cary, North Carolina are included herein as presented to Town Council on May 9, The Capital Improvements Budget/Plan Process Each year, staff prepares a capital improvements budget and a long range capital improvements plan for Town Council s consideration. The capital improvements budget (CIB) and ten year plan (CIP) are recommendations to help meet Council policy direction in the areas of service delivery, infrastructure maintenance and development, regulatory compliance, facilities planning and development, financial condition and projects needed to further enhance the quality of life in Cary. The CIB also identifies revenue sources and recommendations for project funding. Projects included in the CIB/CIP are typically assets with a value of more than $25,000 and a useful life of over three years. Exceptions have been made to this rule on occasion for practical reasons. The CIB contains revenue and expenditure budget amounts for each FY 2014 recommended capital project and sets forth funding needs for fiscal years 2015 through Figures noted for fiscal years 2015 through 2024 are for planning purposes only and are not appropriations for those years. All amounts beyond FY 2014 are staff s best estimate of future project needs and costs. Projects will be adjusted, and in some cases deleted, as situations and needs change throughout the course of the ten year planning period. Capital projects are grouped under the following categories: Water Sewer Transportation Fire Parks, Recreation and Cultural Resources (PRCR) General Government (General Gov t) Downtown Fiscal Year 2014 marks the 13 th year that the Town has produced a rolling ten year capital improvements document. A ten year planning tool of this magnitude has two significant benefits. First, it assists the Town in identifying potential projects necessary to meet the long-term goals of the community. Second, it gives Town Council and staff a view of future infrastructure needs and assists them in understanding the level of funding necessary to fulfill those needs. The farther out into the future one examines the ten year capital improvements plan, the more question there is as to whether and when specific projects will actually occur. Staff annually

2 evaluates each project and adjusts the CIB/CIP to reflect current expectations for the future. Actual project funding decisions are only made for the upcoming budget year. Projects in the FY 2014 CIB are adopted into the applicable project ordinance. This distinction means that any project-related contract entered into by the Town is regarded as a continuing contract for which funds are considered obligated throughout the term of the project. The capital budgeting process occurs concurrently with the development of the operating budget. Formulating the capital improvements budget and plan along with the operating budget allows project-related operating impacts to be incorporated into the annual operating budget. The capital improvements budget process also includes itemizations of staffing, operating, maintenance and start-up costs for all projects within the CIP. This data informs staff and Council of recurring cost impacts and estimated total resource needs throughout the multi-year forecast. The capital improvements budget and plan melds Town goals, infrastructure needs and funding mechanisms into a course of action for the future. Projects selected for the Town of Cary CIB/CIP are those that help accomplish the overall goals and initiatives set by Town Council. An abbreviated listing of the Town s focus areas, goals, practices and initiatives follows. The complete listing, including practices employed to achieve the Town s stated goals is found in the Introduction section of the Town of Cary Annual Operating Budget document. The Town of Cary s Focus Areas, Goals and Initiatives Focus Area I: Community Planning Planning for Quality of Life Goals: Achieve a well-planned community using innovative and proactive planning approaches and techniques. Continuously ensure the right people and systems are in place to provide high quality, responsive community planning customer services every day. Initiatives: Cary Community Plan Sustainability Downtown Redevelopment Economic Development Emergency Preparedness Remarkable Community Transportation Funding/Implementation Study Focus Area II: Infrastructure Making Sure We re Ready When You Are Goals: To ensure that infrastructure exists for current and future needs identified in the comprehensive plan. To develop comprehensive infrastructure plans, execute capital projects and maintain the built environment in an efficient and effective manner.

3 Initiatives: Cary Downtown Theater Water Plant Expansion Western Wake Regional Wastewater Management Facility Fire Station #2 Relocation Focus Area III: Financial Condition Making Sense with the Dollars Goals: Achieve a stable and strong financial position by accurately estimating, prudently allocating and managing financial resources. Continuously provide high quality financial services ranging from day-to-day management to long-term planning that will preserve the Town s strong financial condition. Initiatives: Economic Recovery Existing Debt Management New Debt Management Revenue Forecasts November 2012 General Obligation Bond Referendum Focus Area IV: Municipal Services Providing Excellence in Service to the Citizens Goals: Achieve a high level of service to the citizens in a prompt, reliable, responsive and cost effective manner. Continuously deliver value-added citizen services in a friendly manner that makes our customers appreciative and our citizens proud to call Cary home. Initiatives: Project PHOENIX C-Tran On-Line Services Each project category (water, sewer, transportation, fire, PRCR, general government and downtown) also has specific goals that enhance those set for the Town as a whole. These goals are presented in the category discussions appearing in the latter portion of this message. FY 2014 Capital Improvements Budget/Plan Overview The $102,272,874 recommended Fiscal Year 2014 capital improvements project appropriation represents a 112% increase from the FY 2013 adopted CIB. This increase is primarily attributed to a $66.4 million recommended appropriation supporting construction of a 16 million gallons per day (MGD) expansion at the Cary/Apex Water Treatment Plant.

4 The FY 2014 recommended CIB demonstrates the Town s continued commitment to infrastructure maintenance and improvement (Focus Area II of the Town of Cary Focus Areas, Goals, Practices and Initiatives statement) despite the slow rate of recovery from the 2008 recession. Repeatedly delaying maintenance in order to respond to economic pressures is not a viable long-term solution. The Town s infrastructure must receive frequent and comprehensive maintenance in order to help ensure services are provided continuously in an efficient and effective manner. FY 2014 CIB PROJECT EXPENDITURES OF $102,272,874 Fire $1,385,240 1% Transportation $9,850,000 10% PRCR $5,455,000 5% General Gov't $6,076,136 6% Downtown, $1,000,000 1% Sewer $5,978,000 6% Water $72,528,498 71% A total of $92.9 million or 91% of the FY 2014 recommended CIB supports infrastructure maintenance and improvement initiatives such as: pavement rehabilitation for existing roadways intersection improvements downtown infrastructure improvements reserve fire truck replacement maintenance of existing PRCR facilities contributions toward sanitation and recycling truck replacement program 16 MGD expansion of the Cary/Apex Water Treatment Plant installation of new water lines to reinforce existing lines and better address system demand video surveying and cleaning of the Town s sewer system pump station improvements maintenance and/or renovation of two water tanks replacement of equipment at the North and South Cary water reclamation facilities water main condition assessments

5 Factors Influencing the Development of the FY 2014 Capital Improvements Budget/Plan The Economy and its Effects on Revenue Generation FY 2014 capital reserve fund revenue projections range from 2% higher to 40% lower than anticipated FY 2013 earnings. Decreased revenue is directly related to the economic downturn that began in the fall of 2008 and is expected to slightly improve in fiscal year Decreased development, projected declines in state-collected local revenues, low interest rates on investments and dramatic drops in sales tax and other consumer-related revenues have translated into decreased revenue generation and limited funding for capital needs over the last few years. While the Town is certainly not seeing the revenue growth rate experienced prior to 2008, building permit and sales tax revenues are slowly increasing. Even so, these two major operating fund revenue sources are expected to be about $2.6 million or 9% lower in FY 2014 than they were in The growth of these revenue sources directly affects the availability of pay-as-you-go funds for capital appropriation. Development Fee Revenue Development fee revenue serves as the single largest source of revenue for utility capital projects and is the third largest revenue source for general capital projects. Water, sewer and transportation development fees are collected at the time of permit issuance for new residential and commercial construction. The revenues generated by these fees are then directed toward the respective water, sewer and transportation infrastructure and/or capacity needs associated with new development. The issuance of building permits for residential and commercial development (new construction only) in Cary is estimated to be 7% lower in FY 2014 than the previous year. The Town of Cary issued approximately 1,168 new construction residential and commercial building permits in FY 2013 and estimates that 1,089 will be issued in FY While FY 2014 permit estimates are less than the prior year, it is important to note that both the FY 2013 and FY 2014 estimates are higher than the 1,062 new construction residential and commercial building permits issued in FY Permit issuance trends indicate that building activity is improving, but the improvement is compared to extremely low permit levels in FY To maintain a conservative fiscal approach during this tentative economic recovery, FY 2014 water, sewer and transportation development fee revenues are forecast to decrease 40% below FY 2013 levels. The utilization of fee credits and reimbursements offered by the Town to developers contributes to the disparity between permit issuance levels and estimated revenues. As national and local economic indicators continue to predict that a complete economic recovery is unlikely in the near term, the recommended CIB assumes that new development rates will continue to remain slow, yielding combined development fee revenue of $8 million in FY This figure is 40% less than FY 2013 estimates and 35% less than FY 2012 combined actuals of $12.2 million. Permit fee levels and revenue earnings will be monitored closely in FY 2014 and adjusted upward should development activity begin to rebound.

6 $20,000,000 Development Fee Revenue Trends FYs $ Annual Revenue $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Transportation Development Fees Sewer Development Fees Water Development Fees $0 FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY2009 FY 2010 FY 2011 FY 2012 FY 2013 Estimated FY 2014 Budget Pay-as-You-Go Funding Sources Powell Bill revenue, funding collected by the state and distributed to municipalities by formula for maintenance of non-state maintained roadways, is the Town s largest general capital cash revenue source. FY 2013 Powell Bill receipts totaled $3,559,419. FY 2014 receipts are projected at $3,522,554, or 1% less than FY The state s Powell Bill collections are based largely on the volume of motor fuel taxed by the State of North Carolina and contributions from the State Highway Trust Fund. High gasoline prices leading to fewer gallons being sold and lower State Highway Trust Fund revenues have translated into decreased Powell Bill allocations to municipalities in recent years. Vehicle license fee revenue is the second largest pay-as-you-go revenue source for general capital projects. Like Powell Bill revenue, vehicle license fee revenues are restricted to transportation projects. Vehicle license fee revenue is generated by the sale of vehicle licenses for vehicles owned by Cary residents. FY 2013 receipts, based on the $10 portion of the fee, are projected to be $1,090,398. The FY 2014 budget amount of $1,112,206 is 2% higher than projected FY 2013 revenues. Utility franchise fee revenue is the largest unrestricted general capital cash revenue source. Per North Carolina State Session Law , as of January 1, 2007, the State of North Carolina is the franchising authority for video services within the state. This legislation preempts local government franchising authority. Under this legislation, percentages of sales tax collections on telecommunications, sales tax collections on cable service and sales tax collections on home satellite television service are distributed to municipalities on a proportional basis. Cities and counties share portions of these three state taxes as replacement for expired local cable franchise fee agreements. The state distributes payments from the sales tax on video programming to counties and municipalities on a quarterly basis. The Town opts to allocate 60% of its video programming distribution to the general fund and 40% to the general capital reserve fund. This action is not mandated by the state. The

7 portion of the distribution accounted for within the general capital reserve fund serves as unrestricted funding that may be appropriated to any general capital need. FY 2013 utility franchise fee receipts are projected to be $575,352 or 5% less than FY 2012 receipts. FY 2014 budgeted revenues of $569,598 represent a 1% decrease below the FY 2013 estimated amount of $575,352. Dedicated funding sources for utility capital projects are limited to water and sewer development fee collections and investment income. Water and sewer development fee revenue may only be applied to projects focused on addressing the water and sewer infrastructure and/or capacity needs of new development. These revenue sources peaked in FY 2008 with combined revenue of $17.5 million. FY 2013 estimated combined revenue is $12.3M with a 40% decrease expected in FY As discussed previously, factors such as fee credits and reimbursements lead to conservative development fee revenue estimates that can be adjusted upward as the fiscal year progresses. Transfers from the Town s main operating fund (the general fund) are often utilized to support fire, PRCR, general government and downtown capital projects as these project categories have few to no dedicated general capital funding sources. Property tax and sales tax revenues are the primary sources of revenue for the general fund. Property tax revenue growth rates have been significantly affected by the softening economy but estimates indicate that the Town s sales tax revenues are rebounding somewhat. The Town s sales tax revenue dropped from a high of $24 million in FY 2008 to $21.9 million in FY This represents a loss of $2.1 million or almost 9%. Sales tax revenues rebounded slightly in FY 2011 up to $23.7 million. FY 2012 saw a 4% decrease to $22.7 million due primarily to a reallocation of sales tax revenues within Wake County based upon utilizing the 2010 Census results in the distribution formula. Sales tax revenues are distributed to Cary based upon its proportionate share of population in both Wake and Chatham counties. Compared to previous population estimates, Cary now makes up a smaller portion of Wake County s total population. As most of Cary lies within Wake County s borders, this decrease translates into fewer sales tax funds being distributed to the Town. Cary s FY 2013 sales tax receipts are estimated at $23.2 million in FY The FY 2014 estimate is $23.9 million or 3% higher than FY 2013 estimated. Sales tax revenue accounts for approximately 18% of total general fund revenues in FY The FY 2013 budget included a $5 million transfer in support of one-time general capital purchases. A $9.1 million general fund transfer is recommended in FY $3.2 million of this total supports park and greenway infrastructure maintenance and improvements and sanitation and recycling truck replacement. $3.3 million funds replacement of the Town s street lights with LED fixtures. The LED Street Light project yields an estimated savings of $600,000 annually. $1.4 million supports Fire Department needs such as purchase of a reserve rescue truck and design of a new fire station to be located in the northwestern area of Cary. $1,000,000 will be directed toward infrastructure improvements in Cary s downtown while the remaining $300,000 supports other general government needs.

8 In addition to these traditional funding sources, the Town of Cary pursues federal and state grant opportunities that align with its capital improvements plan. Four capital projects included in the recommended FY 2014 capital improvements budget are partially supported by $3.4 million in grant funds. The following table indicates the two transportation and two PRCR projects with appropriated grant and Town matching funds in FY The FY 2014 recommended capital improvements budget also utilizes $1.4 million in interlocal funds distributed by Wake County to the Town in support of facility improvements at the WakeMed Soccer Park, USA Baseball National Training Complex and Cary Tennis Park. $20.1 million in improvements is planned to occur at these facilities from FYs $10 million of this cost will be supported by the distribution of interlocal funds generated by hotel/motel occupancy tax and prepared food and beverage taxes to Cary by Wake County. The full funds distribution schedule is noted below: Interlocal Funds Distribution Amount FY ,000 FY ,000,000 FY ,000,000 FY ,300,000 FY ,700,000 FY ,600,000 FY ,000,000 Total $10,000,000 The FY 2014 recommended CIB appropriates $1,850,000 to the three special facility projects supported by interlocal funds. The FY 2013 $400,000 and FY 2014 $1,000,000 distributions are directed to these needs in FY 2014 with remaining funding being provided by the Town. The Town s Debt Service Ceiling In March 2008, a series of financial goals were established by Town Council to guide staff in the management of areas such as operating fund balances and debt service. These goals established expectations regarding minimum levels (floors) for operating fund balance and maximum levels (ceilings) for debt service. The approved debt service target directs that general (non-utility) debt service, or the repayment of borrowed funding, should not exceed an amount equal to 15% of total approved general operating expenditures and debt service for a given budget year.

9 This debt service ceiling heavily influenced the development of the FY 2014 recommended capital improvements budget and plan. Debt is a primary funding source for large general capital improvement projects. As of July 1, 2013, the Town s outstanding debt principal for general capital projects will total $112.5 million with no additional debt appropriations budgeted. $40 million of $80 million in general obligation bond debt approved by voters in November 2012 and appropriated in December 2012 will be sold in the fall of These funds support seventeen transportation, parks, recreation and cultural resources and fire projects. As part of the 2012 general obligation bond referendum, voters were informed that if all three referendum questions (transportation, parks, recreation and cultural resources and fire) were approved, there would be a two cents tax increase in FY 2014 and another two cents tax increase in FY 2016 to pay the associated debt service. Debt service on the fall 2013 sale will begin in late FY The FY 2014 Recommended Budget includes a two cents tax increase specifically aligned with supporting the debt service associated with this first $40 million issuance. The remaining $40 million of the 2012 general obligation bond referendum funds is planned to be sold in FY A second two cents tax increase will be recommended as part of the FY 2016 budget to address that debt service. A total of $14.3 million in principal and interest is estimated to be retired, or paid down, in FY Debt service projections show the Town s debt service requirements will be $14.3 million, or 11% of general operating expenditures in FY The current debt schedule shows a debt service peak of $19.7 million in FY 2017 with a gradual annual decline in subsequent fiscal years. These estimates take into account debt retired annually and do not include any new general debt appropriations beyond those made in prior fiscal year budgets. With identified project needs in FYs well beyond the Town s projected debt service capacity over that time frame, and debt serving as the primary funding source for major capital initiatives, the development of an affordable capital improvements budget/plan given the 15% debt service ceiling was a major focus of the FY 2014 budget process. Capital Improvements Budget Funding Principles The Town s FYs recommended capital improvements budget and plan focuses on core infrastructure maintenance, necessary infrastructure improvements, and prior commitments and mandates. It is also shaped by Focus Area III of the Town s Focus Areas, Goals, Practices and Initiatives statement: Financial Condition Making Sense with the Dollars. Projects selected for the FYs 2014 CIB/CIP were chosen based not only on their alignment with other stated Town focus areas, goals and initiatives, but also their ability to yield a capital improvements budget/plan that adheres to the following four funding principles: 1. Funding Principle: Utilize as little debt as possible to minimize additional debt service obligations Typically, the Town of Cary utilizes a combination of general obligation bond debt, installment purchase debt and revenue bond debt to fund major infrastructure needs. In order to help with affordability and remain in accordance with the 15% debt service ceiling, no general fund supported general obligation bond debt and no installment purchase (asset

10 backed debt) is recommended for FY Specific information related to recommended FY 2014 debt appropriations follows. General Obligation Bond Debt The FY 2014 recommended capital improvements budget does not appropriate any general obligation bond debt. The $80 million in general obligation bond debt authority approved by voters in November 2012 was appropriated in December 2012 (FY 2013) to seventeen transportation, parks recreation and cultural resources and fire projects. Revenue Bonds The FY 2014 recommended CIB includes $36.1 million in revenue bonds for water infrastructure needs. Revenue bond debt is secured by the Town s utility rates which are dedicated, non-tax revenue sources. Utility rate increases may be used if necessary to generate the additional revenue needed to afford the incremental debt service associated with revenue bond issuance. The $36.1 million in revenue bond debt recommended in FY 2014 supports a portion of the $66.4 million needed for construction of a 16 million gallon per day expansion at the Cary/Apex Water Treatment Plant. 2. Funding Principle: Maximize the use of existing capital reserve fund balances Utility Capital Reserve The FY 2014 recommended CIB contains a $19.8 million appropriation of cash from utility capital reserve fund balance. Unrestricted fund balance comprises $1.3 million of the total fund balance appropriation, while restricted fund balance provides the remaining $18.5 million. Total utility capital reserve fund balance at the close of FY 2014 is anticipated to be $21.9 million with the majority of these funds restricted to growth-related water and sewer projects. These cash resources will be utilized as the primary funding source for upcoming qualifying projects to minimize additional debt obligations. General Capital Reserve Appropriations of estimated restricted fund balances available at the end of FY 2013 have been maximized to continue leveraging currently available resources. The FY 2014 general capital improvements budget includes $10.2 million in appropriations from general capital reserve fund balance. $1.9 million of this figure is unrestricted, while the remaining $8.3 million is restricted. General capital reserve fund balance at the close of FY 2014 is expected to be $21 million with 66% of these funds restricted to certain types of transportation projects.

11 3. Funding Principle: Minimize reliance on FY 2014 capital reserve revenues Utility The FY 2014 recommended CIB appropriates a total of $15.5 million of FY 2014 revenue in support of utility capital reserve projects. $15.4 million of this amount will be received from the Town of Apex in support of three separate projects related to the Cary/Apex Water Treatment Plant (C/A WTP). The C/A WTP is jointly owned by the towns of Cary and Apex with Cary being financially responsible for 77% of the plant s operations and capital needs and Apex responsible for the remaining 23%. The Town of Cary budgets for the total capital needs of the C/A WTP within its capital budget. The Town of Apex s share is paid by the Town of Apex to Cary and is accounted for as project revenue as the respective projects are executed. $80,135 of FY 2014 revenue recommended for appropriation represents reimbursements from the Town of Cary s municipal partners for the Western Wake Regional Wastewater Management Facility. The Town of Cary reflects all capital needs for the WWRWMF in its CIB/CIP. The municipal partners provide their respective capital funding as revenue to the Town of Cary for their portions of the project. The remaining $6,253 is FY 2014 water development fee revenue utilized to address FY 2014 growth-related water projects. General $1,040,000 of anticipated FY 2014 general capital reserve fund revenue is programmed for appropriation in the recommended capital improvements budget. $1,000,000 represents interlocal funding to be received from Wake County in support of three special facility improvements projects (WakeMed Soccer Park, USA Baseball National Training Complex and Cary Tennis Park). The remaining $40,000 is an anticipated contribution from the Cary Road Race organization in support of the Symphony Lake greenway bridge replacement project. No other general capital reserve fund revenue is recommended for appropriation in FY Funding Principle: Limit transfers from the general and utility operating funds for capital purposes. Utility Fund Transfers The FY 2014 recommended CIB includes utility fund fund balance transfers totaling $7.1 million in support of utility and general capital projects. $2,375,000 of this amount supports five water projects, while $4.7 million funds thirteen sewer projects. The remaining $53,988 is directed to the Town s land banking acquisition initiative. This funding is generated each year through water rates that were increased for this purpose by 3% in FY 2002, generating $1 million per year that is directed toward land banking acquisition. As debt service associated with the issuance of $10,000,000 in 2005 open space general obligation bonds came on-line in FY 2010, only $53,988 of this $1,000,000 is available for land purchases in FY The remaining $946,012 is directed to the general fund where it addresses debt service associated with the issued 2005 open space general obligation bond debt.

12 General Fund Transfers $9.1 million in general fund transfers are included in the FY 2014 recommended CIB. These funds support the fire, parks recreation and cultural resources, general government and downtown capital projects noted below. General Fund Project Name Transfer Amount Reserve Rescue Truck 800,000 Fire Station - O'Kelly Chapel Road Area 550,000 Subtotal - Fire 1,350,000 Artificial Turf Fields 573,000 Greenway Resurfacing Projects - FY ,500 Cary Tennis Park Court Renovations 250,000 Old Reedy Creek Road Trailhead 210,000 Penny Road Elementary School/Park 175,000 Tennis Court Renovations - FY ,000 Park and Greenway Renovations - FY ,000 Public Art - Fire Station #2 110,000 Sertoma Amphitheater and Restroom Renovation 100,000 Parks, Recreation and Cultural Resources Venue Wayfinding Signage 94,500 Playground Surface Repairs/Replacement - FY ,000 Athletic Field Fencing Repair/Replacement - FY ,000 Indoor Athletic Court Resurfacing - FY ,000 Athletic Field Fencing Amenities Replacement (Windscreen, Safety Cap, Padding, Netting) - FY ,000 Public Art - New Hope Church Road Trailhead Park 30,000 Subtotal - PRCR 2,475,000 LED Street Lights 3,267,048 Sanitation and Recycling Truck Replacement 750,000 OneSolution Software 300,000 Subtotal - General Gov't 4,317,048 Downtown Improvements 1,000,000 Subtotal - Downtown 1,000,000 TOTAL GENERAL FUND TRANSFER $9,142,048 UTILITY CAPITAL IMPROVEMENTS BUDGET AND PLAN Water and sewer capital projects over the next eleven years, including the FY 2014 budget and the FYs 2015 FY 2024 plan, total $457 million. WATER CAPITAL IMPROVEMENTS The goals of the water capital improvements budget and plan are to: Provide water system customers with a safe, cost effective and adequate supply of treated water. Ensure that a continuing sufficient capacity of treated water exists to serve the Town s customers. Ensure that facilities are provided for adequate transmission of existing and planned water demands at adequate pressure. Provide for orderly development of the Town s water treatment, storage and distribution systems. Ensure that strict environmental and regulatory requirements are met in the design and construction of the Town s water system.

13 Supplement water supply for non-potable uses with reclaimed water distribution lines and facilities. FYs Water Capital Improvements Budget and Plan The water capital improvements budget and plan (FYs ) includes $272 million in projects. Projects identified throughout this period range in scope from upgrading water lines each year to constructing an expansion of the Cary/Apex Water Treatment Plant (C/A WTP) in FY The FY 2014 appropriation to the water capital improvements budget totals $72,528,498. This is a 323% increase from the adopted FY 2013 CIB. The FY 2014 water capital improvements budget focuses heavily on water treatment, water lines and water storage tanks as $71.8 million, or 99%, of the recommended water CIB is directed to these system components. $66.4 million supports construction of a 16 million gallons per day expansion to the Cary/Apex Water Treatment Plant. $4.5 million provides for water line projects ranging from installation of connections and extensions to upgrading existing lines. Another $1.1 million supports water storage tank renovations and replacements and water system management planning. All of the projects included in the FY 2014 water capital improvements budget/plan represent the continuation of the Town s comprehensive water system replacement and enhancement schedule. Significant projects included in the ten year planning horizon include construction of a raw water transmission pipeline ($17 million) and another 8 million gallons per day expansion at the Cary/Apex Water Treatment plant bringing total capacity to 64 MGD ($60 million). SEWER CAPITAL IMPROVEMENTS The goals of the sewer capital improvements budget and plan are to: Provide adequate collection and treatment (reclamation) of wastewater produced by system customers to a level that meets or exceeds the permit limits issued by regulatory authorities as cost effectively as possible. Provide sewer system customers with safe, cost effective and adequate disposal of wastewater. Discharge treated wastewater from each reclamation facility in a manner that protects the receiving streams from pollutants and contamination. Ensure that continuing sufficient capacity of wastewater collection and treatment exists to serve the Town s customers. Ensure facilities are provided for adequate conveyance of existing and planned wastewater flows. Provide for orderly development of the Town s wastewater collection and treatment systems. Ensure strict environmental and regulatory requirements are met in the design and construction of the Town s wastewater system. FYs Sewer Capital Improvements Budget and Plan The sewer capital improvements budget and plan (FYs ) includes $185 million in projects. Projects scheduled during this period range in scope from sewer line replacements/upgrades to an expansion of the Western Wake Regional Wastewater Management Facility (WWRWMF) in FYs

14 The FY 2014 appropriation to the sewer capital improvements budget totals $5,978,000. This is 31% less than FY 2013 appropriations. $2.1 million, or 36% of FY 2014 sewer appropriations, funds waste water system management projects such as pump station upgrades and expansions and SCADA implementation. $1.2 million is budgeted for waste water collection projects including sewer rehabilitations and interceptor improvements. $1.1 million supports reclaimed water projects, while $835,000 is recommended for equipment replacement projects at the North and South Cary water reclamation facilities. An additional $500,000 provides for continued improvements at Swift Creek regional pump station. $235,000 funds project management for the Western Wake Regional Wastewater Management Facility construction. The FY 2014 sewer capital improvements budget and plan continues to focus on efficiently and effectively providing safe and adequate wastewater treatment. Both the budget and the plan emphasize overall wastewater system management and infrastructure maintenance. GENERAL CAPITAL IMPROVEMENTS BUDGET AND PLAN General capital projects over the next eleven years, including the FY 2014 budget and the FYs 2015 FY 2024 plan, total $466 million. Of this amount, $151 million is planned for transportation projects, $147 million is directed toward parks, recreation and cultural resources projects, $116 million is for general government projects, $51 million is included for fire projects and $1.3 million for downtown projects. Balancing funding requirements for these projects with the priorities in each respective category will continue to prove challenging. As is the current process, future annual funding decisions will be based on funding availability aimed at achieving the highest priorities at that time. TRANSPORTATION CAPITAL IMPROVEMENTS The goals of the transportation capital improvements budget and plan are to: Provide capacity to improve levels of service on existing deficient roadways and to provide additional capacity in advance of growth. Maintain efficient and safe traffic patterns. Offer alternate means to move people (e.g. transit, pedestrian, bicycle). Provide for the maintenance of infrastructure. Prepare for projects in advance to reduce cost and provide time for sufficient community input. FYs Transportation Capital Improvements Budget and Plan The transportation capital improvements budget and plan (FYs ) includes $151 million in projects. Projects identified during this period range in scope from sidewalk installation to major interchange modifications and road improvements. The FY 2014 recommended transportation capital improvements appropriation totals $9,850,000 which is 14% less than adopted FY 2013 appropriations. The Morrisville Parkway Interchange and Morrisville Parkway Extension Phase III Carpenter Upchurch Road to Green Level Church Road projects account for $5.4 million, or 54%, of FY 2014 transportation appropriations.

15 The FY 2014 transportation recommended capital improvements budget is funded with $7.4 million of general capital reserve fund balance and $2.5 million of grant funds. No general obligation bond debt is recommended for appropriation to transportation projects in FY The recommended FY 2014 transportation CIB continues to focus on infrastructure maintenance and road capacity. $4 million, or 41%, of total FY 2014 recommended transportation appropriations supports the Town s annual street improvement project. This project serves as the primary means of accomplishing overall repair and resurfacing for Town-maintained streets. Most major roadways within Cary are maintained by the state while the Town maintains most residential streets. Road capacity remains a priority in the FY 2014 recommended CIB. Two road capacity projects are recommended in FY The Morrisville Parkway Interchange project provides for a new interchange at the Morrisville Parkway and the Triangle Expressway in western Cary along with a short, two-lane street extension on the west side of the Triangle Expressway. The interchange will allow travelers direct entry to the Triangle Expressway from Morrisville Parkway. FY 2014 funds ($4,100,000) support easement acquisition. Construction funding for this work is noted in FY 2016 of the CIP. The Morrisville Parkway Extension Phase III Carpenter Upchurch Road to Green Level Church Road supports the extension of a 4-lane median divide roadway at I-540 between the western segment of Green Level Church Road through I-540 and on to Carpenter Upchurch Road. An atgrade crossing of the railroad is included within the project scope. FY 2014 funding ($1,250,000) supports preliminary engineering and right of way acquisition. The remaining $500,000 appropriation recommended in FY 2014 supports engineering and design services associated with the development of a regional transit facility from which the Town s C-Tran transit service will be based. Total project cost is estimated at $6,924,000. The FY 2014 funding request of $500,000 will support engineering and design services. The recommended FY 2014 funding amount is 90% grant funded and 10% Town supported. An additional $6,424,000 funding need has been identified in FY 2015 for construction. The FYs transportation capital improvements plan continues to focus on infrastructure maintenance and the promotion of alternate modes of transportation. Funding needs for road capacity projects alone during this period total $42 million. As with all other capital project categories, funding availability will continue to set the tone for the size and scope of future year transportation capital improvements budgets. FIRE CAPITAL IMPROVEMENTS FYs Fire Capital Improvements Budget and Plan The goals of the fire capital improvements budget and plan are to: Strategically locate fire stations in order to comply with the standard of coverage policy and projected areas of growth. Maintain or improve compliance with the Insurance Services Office grading schedule. Plan for capital replacements of crucial fire and rescue equipment including pumpers and aerial trucks.

16 The fire capital improvements budget and plan (FYs ) includes $51 million in projects ranging in scope from the construction of new fire stations to purchasing fire apparatus. The FY 2014 recommended capital improvements budget appropriation for fire projects totals $1,385,240 and is totally supported by general fund transfer dollars with the exception of $35,240 of unrestricted franchise fee fund balance. FY 2014 appropriations to the fire category are 104% higher than the $678,000 budgeted in FY FY 2014 recommended appropriations provide for the purchase of a reserve rescue truck ($800,000), completion of a rear-entrance drive way to Fire Station #5 ($35,240) and site acquisition, permitting and design for a new fire station to be located in the northwestern area of Cary ($550,000). An additional funding need of $10.2 million would be needed in FY 2015 for construction of this fire station. The FY 2014 CIP forecasts the addition of four new fire stations during the FYs time frame. The need and timing for additional stations and related equipment are assessed during each budget year. Should significant changes in residential and commercial development patterns occur, these stations and their equipment will be moved forward in the plan or delayed as necessary. The CIP also calls for the purchase of several new and replacement vehicles between FYs All fire stations, pumpers, aerial ladder units, and service trucks requested in FY 2014 and beyond are based upon projected growth and the resulting need for fire protection infrastructure, standard of coverage criteria, grading schedule criteria or the need to replace existing capital assets. PARKS, RECREATION AND CULTURAL RESOURCES (PRCR) CAPITAL IMPROVEMENTS FYs PRCR Capital Improvements Budget and Plan The goals of the PRCR capital improvements budget and plan are to: Provide a balance of passive and active recreation facilities and programs which fulfill the current and future recreation needs of Cary residents. Provide facilities and programs that respond to the diverse recreational needs of our residents, regardless of age or ability. Establish public/private partnerships with developers, nonprofit organizations and local citizens to encourage park, greenway and bikeway development. Establish intergovernmental partnerships with adjacent counties and municipalities and the county school system to encourage joint development of park facilities. Provide realistic and feasible strategies for the development and long-term maintenance of park, greenway and bikeway facilities and programs. Encourage alternative transportation through greenway and bikeway development. Provide park, greenway and bikeway facilities that are environmentally sensitive and cost effective. The PRCR recommended capital improvements budget and plan (FYs ) includes $147 million in projects. Projects identified during this period include park and greenway

17 renovation and construction, enhancements to special facilities and maintenance of existing infrastructure. The FY 2014 recommended appropriation to PRCR capital improvements projects totals $5,455,000. This is a 19% decrease from the adopted FY 2013 funding level. No debt is recommended for PRCR projects in FY FY 2014 PRCR appropriations continue to focus on maintenance of existing infrastructure with $1.7 million, or 31%, of the appropriation supporting renovation and major maintenance projects. FY 2014 recommended PRCR appropriations are funded with $1.1 million in general capital reserve fund balance ($400,000 of which is interlocal revenue received in FY 2013), a $2.5 million transfer from the general fund, $1 million in FY 2014 interlocal revenue, $862,000 in grants and $40,000 in contributions. $2.2 million, or 40% of the FY 2014 recommended PRCR capital appropriations support enhancements or expansions at some of the Town s special facilities. $1.9 million, $1.4 million of which is funded with interlocal revenues, is directed toward expansion and improvements at the Cary Tennis Park, WakeMed Soccer Park and USA Baseball National Training Complex. Another $250,000 provides for court renovations at the Cary Tennis Park that fall outside of the scope of the interlocally supported work. $65,000 funds the replacement of three ramps at the Cary Sk8 Park. $1.2 million, or 22% of recommended FY 2014 PRCR capital appropriations, is directed toward greenway and greenway amenity construction. Of the two greenway projects recommended for funding in FY 2014, both (Chapel Hill Road Pedestrian Improvements and Old Reedy Creek Road Trailhead) are receiving grant funding. The Chapel Hill Road Pedestrian Improvements project provides for the design, right of way acquisition and construction of a 1,000 linear foot street-side trail along Chapel Hill Road in front of Northwoods Elementary School, connecting the Northwoods Greenway to the existing Chapel Hill street-side trail. 1,900 linear feet of sidewalk on the south side of Chapel Hill Road is also included. Total project cost is $465,000. The Town has applied for a grant that would support 80% of this cost, or $372,000. The Town is responsible for providing the remaining 20% or $93,000. The entire $465,000 is included in the FY 2014 recommended budget. The Old Reedy Creek Road Trailhead project is also supported with grant funds. This location is the starting point for the Town s 5.5 mile Black Creek Greenway, Wake County s mountain bike trails linking to Lake Crabtree County Park and the 5,000 acre Umstead State Park. The trailhead will consist of a +/-100 car parking lot, restroom, drinking water and access to the different trail systems nearby. Total project cost is $800,000. $100,000 was appropriated in FY 2012 with 80% of the funds supported by STP-DA grant and the remaining 20% contributed by the Town for design. FY 2014 funding of $700,000 represents the remaining project need for construction. The Town has applied for a LAPP grant which would support 70% of this amount, or $490,000. If awarded, the Town will be responsible for the remaining 30% or $210,000. Two public art initiatives totaling $140,000 and $175,000 in improvements to the Penny Road Elementary School/Park are also included in the recommended FY 2014 PRCR capital improvements budget.

18 The FY 2014 PRCR capital improvements budget and plan upholds the Town s commitment to infrastructure maintenance and improvements. The Town will continue to adjust the capital improvements plan as the economic climate changes so that citizen needs, care for existing facilities and planning for future parks, greenways and special facilities are achieved as efficiently and effectively as possible within the funding options available each year. GENERAL GOVERNMENT CAPITAL IMPROVEMENTS FYs General Government Capital Improvements Budget and Plan The goals of the general government capital improvements budget and plan are to: Improve the efficiency of operations through the use of improved equipment and technology. Maintain existing service levels through the addition of equipment to help serve existing and future citizens. Plan for capital replacements based on maintenance records, service life and overall condition/appearance. Provide for both preventive and non-routine infrastructure maintenance requirements. Provide for auxiliary facilities to support programs. Provide the necessary space and amenities for staffing levels required to maintain and enhance Town services and programs. The recommended general government capital improvements budget and plan (FYs ) includes $116 million in maintenance, community and facility projects. The FY 2014 recommended general government capital improvements budget totals $6,076,136. This is a 166% increase from adopted FY 2013 CIB funding. $4.3 million of the FY 2014 recommended general capital CIB is funded with a general fund transfer. $1.7 million is supported by general capital reserve fund balance and the remaining $53,988 is a utility fund fund balance transfer. No debt is recommended for general capital projects in FY $750,000 of the recommended general fund transfer appropriation funds the sanitation and recycling truck replacement project in FY This project supports the scheduled replacement and anticipated new route additions of sanitation and recycling truck vehicles. $3.6 million of general fund transfer funding supports the LED Street Lights project ($3,267,048) and the One Solution software project ($300,000). The LED Street Light project facilitates the replacement of most Town street lights with fixtures that utilize light emitting diode (LED) technology. The full project cost is included in the FY 2014 recommended budget and is estimated to result in $600,000 in savings per year once fully implemented. The One Solution software project supports the conversion of the Town s existing SunGard Naviline software system to SunGard s One Solution product. These platforms house the Town s accounting, purchasing and land development applications. Total project cost is estimated at $955,000. $305,000 has been appropriated through FY An additional $350,000 funding need has been identified in FY 2015 for project completion. The $1.7 million unrestricted general capital reserve funding supports a number of projects recommended in FY 2014 including: the purchase and installation of asset management software

19 ($300,000); technology upgrades in many of the Town s conference rooms ($107,100); design of two equipment wash stations ($30,000); the addition of extra fiber conduit into a system that will ultimately connect with Wake County s radio tower ($250,000); the extension of the Town s fiber network to the South Cary water reclamation facility and Middle Creek community center ($80,000); parking lot resurfacing ($188,000) and facility improvements at the Dixon Avenue Citizen Convenience Center operated by the Public Works and Utilities Department ($750,000). $53,988 in utility fund transfer appropriations are directed to the Town s land banking project. This project provides funding for land acquisition opportunities that may arise during the course of a fiscal year. While $1 million is generated annually in the utility fund for land acquisitions, FY 2014 marks the fourth of ten years where the majority of the funds generated by the utility fund for this purpose will be directed toward debt service associated with issued 2005 open space general obligation bond debt. The $53,988 appropriated for land acquisition was not required for open space debt repayment. The FYs general capital improvements plan continues to focus on infrastructure maintenance and land banking. Funding needs for community projects related to strictly to stormwater during this period total $57 million. As general government projects are heavily reliant on general fund transfers, the funding availability of this pay-as-you-go source will continue to influence the scope of future year general government capital improvements budgets. DOWNTOWN CAPITAL IMPROVEMENTS FYs Downtown Capital Improvements Budget and Plan The goals of the downtown capital improvements budget and plan are to: Facilitate private redevelopment efforts by leveraging Town investments in the downtown core area. Revitalize the downtown core area through physical improvements and Town sponsored activities. The recommended downtown capital improvements budget and plan (FYs ) includes $1.3 million in downtown Cary focused projects. The FY 2014 recommended downtown capital improvements budget totals $1,000,000. This is a 26% decrease from adopted FY 2013 CIB funding. The FY 2014 recommended downtown CIB is fully funded with a general fund transfer. No debt is recommended for downtown capital projects in FY The entire FY 2014 recommended appropriation is directed to the Downtown Improvements project. This project provides a dedicated amount of funding for implementation of impactful and visible improvements to the downtown area. The Town is committed to bringing more people and new investment to the downtown area and infrastructure and other physical improvements are ways to help achieve this goal. The FY 2014 appropriation supports a number of downtown improvements including: upfitting the Mitchell Pharmacy building