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HomeMy WebLinkAbout2019-03-01 Letter to Aaron S.Y. Chung and Council Members transmitting Capital Budget for FY 2019-2020Harry Kim Afuvor Will Okabe Alanagong Diteclor Barbara I Kossow Deputy Managing Director ff (Offre affhr agar 25 Aupuni Street, Suite 2603 • Hilo, Hawal'i 96720 • (808) 961-8211 • Fax (808) 961-6553 KONA: 74-5044 Ane Keohok5lole Hwy., Bldg C • Kalk,a-Kona„ Hawaii 96740 (808) 323-4444 e Fax (848) 323-4440 March 1, 2019 Council Chairman Aaron S.Y. Chung and Members of the County Council County of Hawai'i 25 Aupuni Street Hilo, HI 96720 Aloha Council Chairman and Council Members,: Transmitted herewith is the Capital Budget for FY 2019-2020 submitted for your review and approval and the Capital Program for the next six years from FY 2019-2020 to 2024-2025. The Capital Budget includes 39 projects requiring a total appropriation of $160.3 million. Funding Sources Capital projects are typically funded by debt (bonds, State Revolving Fund loans), revenue sources (fuel tax, other special revenues), state grants, federal grants or loans, and other financing options (fair share contributions or special financing districts). The Capital Budget presented herein includes capital projects of which about $99.1 million are intended to be funded in whole or part by bonds, $56.5 million to be funded by the State Revolving Loan Fund or State CIP, $3.5 million to be funded by federal, and $0.5 million to be funded by fair share contributions (see Table 1). Debt Service Every year, we strive to present a budget that is fiscally constrained (in terms of prudent debt service planning) and selective based on rational criteria. The Government Finance Officers Association, a professional organization of government officials, recommends a prudent debt service limit to be 15 (fifteen) percent of general expenditures. The lower the interest rate and the greater the revenues, the more can be borrowed while staying within the prudent debt service limits. The proposed operating budget for this coming fiscal year includes debt service for short term bond anticipation notes, which are used to reduce carrying cost and insure that cash will be available for projects as needed. As budgeted, County of Hawai'i is an Equal Opportunity Provider and Employer March 1, 2019 Page 2 the resulting total debt service is estimated at 8.0 percent of the general expenditures. If all debt that has been authorized by the County Council was issued, the debt service percentage would be 11.4 percent of the general expenditures. What is a Capital Improvement Project? A project is eligible for funding from the capital budget if it is a major nonrecurring expenditure, such as: 1. Land acquisition; 2. Infrastructure improvement other than buildings that add value to the land or improves utility (roads, drainage, sewer lines, parking, landscape or similar construction); 3. New buildings or structures or additions to buildings, including related equipment and appurtenances which are integral to the new structure; 4. Nonrecurring rehabilitation, remodeling or expansion of infrastructure and buildings; S. Planning, feasibility, engineering, or design studies related to capital improvement projects; 6. Information and communications technology infrastructure. Project Data/Financial Impact Statements Proposed capital projects are organized in sections by County agencies. The first document in each section is a Summary of Department Requests for FY 2019-2020. Following the Summary are the individual Project Data/Financial Impact Statements, which include information about the lead County agency, location, project description, Council benefit districts, project consistency with long range plans, impact on operating budget, sustainability focus, project readiness, etc. Fair Share Contributions A Fair Share Annual Report as of June 30, 2018 was submitted to the County Council on January 29, 2019. This document provides information on the total fair share contributions, appropriations, and funds available for capital improvements. At this time, there are two projects proposed to use fair share contributions. We have and will continue to strongly encourage the use of fair share contributions to fund capital projects when possible. We ask for your favorable consideration of this Capital Budget and Program. Aloha, cy-� LQ-� Harry Kim MAYOR County or Hawaii is an Equal Opportunity Provider and Employer.