WW Project Pages.xlsx - City of Springfield

Another significant aspect of the funding scenario is the current imbalance between user fees and SDCsas sources of capital funding. City staff has documented that in many cases user fees are funding adisproportionate share of capital projects. Further, the economic downturn experienced in recent yearsled Council to defer significant portions of SDC increases that have been proposed based on updatedfacilities plans. Although the recommended SDC increases were fully implemented effective January 1,2011, the sluggish economic recovery continues to be reflected in a substantially reduced number ofbuilding permits and resultant SDC revenues. Until economic conditions and development activityimproves, existing users of the systems will continue to bear most of the costs associated withexpanding and upgrading those systems.For the 2012‐2016 CIP, a second source of concern is the projection of a continual decrease in fundingfor street preservation projects. State and local fuel tax revenues continue to decline because of thecurrent recession and increased fuel efficiency that reduces revenue even in the face of increased milestraveled. While the Council has increased storm drainage and local wastewater fees to maintain andenhance the level of preservation for those systems, the City no longer has the authority to increase itslocal fuel tax. While the State Legislature approved an increase in the State fuel tax that becameeffective on January 1, 2011, the City does not expect that the increased revenue it will receive from theState will be sufficient to reverse the trend of declining revenues to support the City’s transportationsystem.SYSTEMS DEVELOPMENT CHARGESThe second major source of capital funding is Systems Development Charges (SDCs). These are chargesimposed on development to provide funding to assure that the City can fund the cost of theinfrastructure needed to serve that level of development. There are several types of SDCs that can beused for capital projects. One of the SDC funds is the “Old” SDCs, which were funds collected under SDClaws in effect prior to 1991, and have different restrictions on use than the current SDC funds.These charges are calculated based upon a methodology which must be adopted by the Council andwhich must conform to State law. The process involves two separate components. The first is animprovement fee which is based on: a determination of which capital projects are needed toaccommodate growth, the amount of additional capacity that is created by those projects, and adetermination of the unit cost of additional capacity calculated by dividing the sum of project costs bythe sum of the capacity created. The second component, a reimbursement fee, is calculated bydetermining the value of the existing system, the amount of capacity available in that system, and thevalue of a unit of capacity. If the system has existing capacity, then development can be charged a feebased upon the units of existing capacity development will require. These charges are increasedannually based on documented increase in the Cost of Construction Index.Unfortunately, the facilities plans which are used to derive the projects to be constructed and thecapacity created by those projects (which dated from the 1970s), had been significantly out of date forboth local wastewater and storm drainage. As a result, fees collected were far below the amount,permissible under the statutes, which were needed to construct improvement projects. In 2008, the2012-2016 Capital Improvement Program Page 15