2004-25697 Reso
RESOLUTION NO. 2004-25697
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, ESTABLISHING A
CAPITAL RENEWAL AND REPLACEMENT FUND TO PROVIDE A
DEDICATED SOURCE OF FUNDING FOR CITY CAPITAL
RENEWAL AND REPLACEMENT PROJECTS THAT EXTEND THE
USEFUL LIFE OF GENERAL FUND ASSETS; ESTABLISHING A
PROCEDURE FOR ANNUAL APPROPRIATION OF FUNDS;
ESTABLISHING A PROCEDURE FOR THEIR USE; AND
ADOPTING THE FISCAL YEAR (FY) 2004/05 BUDGET FOR THE
FUND, IN THE AMOUNT OF $1,347,070.
WHEREAS, the City has a significant infrastructure investment that includes 322
buildings, structures and facilities; 472 acres of recreational open space; over 25 miles of
inland canals, oceanfront beaches, City-owned seawalls; and 140 miles of paved streets;
with associated swales landscaped medians, street and landscape lights, and curbs and
gutters; and
WHEREAS, despite $27.4 million budgeted in the Fiscal Year (FY) 2004/05 General
Fund Operating Budget for general ongoing maintenance, as well as $4.25 million in
potential funding from the proposed Miami-Dade County General Obligation Bond issue for
Old City Hall; the Sixth Street Community Center; Flagler Monument; and Scott Rakow
Youth Center improvements (carpets, ADA, pressure cleaning, ceiling tile, electrical, Ale),
there remains $1,816,000 in immediate renewal and replacement needs without funding;
and
WHEREAS, the City is procuring a consultant to develop a proactive schedule of
renewal and replacement needs for the City's existing infrastructure that will require
additional funding in future years; and
WHEREAS, as a result of the City's ongoing $400 million Capital Improvement
Program, there will be a significant additional increase in renewal and replacement needs;
and
WHEREAS, annual capital renewal and replacement needs compete for General
Fund resources with other needs, such as public safety, with the result that capital renewal
and replacement needs may be deferred; and
WHEREAS, bond rating agencies, (Fitch, Moody's, and Standard & Poor's) view
renewal and replacement policies as a significant criteria in assessing a government's
credit worthiness; and
WHEREAS, the Mayor and City Commission recognize the need to establish a
dedicated source of funding to ensure annual renewal and replacement of the City's
General Fund capital assets on an ongoing basis; and
WHEREAS, on September 9 2004, the Mayor and City Commission tentatively
adopted the proposed millage rate of 7.425 mills, which included 0.126 mills dedicated for
capital renewal and replacement.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, as follows:
1. A permanent Capital Renewal and Replacement Fund is hereby established to be
used for capital projects that extend the useful life of the City's General Fund
assets.
2. The Capital Renewal and Replacement Fund shall be funded annually,
commencing in Fiscal Year 2004/05, through a transfer from the General Fund.
3. The initial annual transfer from the General Fund to the Capital Renewal and
Replacement Fund, for Fiscal Year 2004/05, shall be the amount of $1 ,347,070.
4. In subsequent fiscal years, the Fund will be increased by, at a minimum, the amount
which would represent the value of the debt service millage reduction resulting from
growth in the assessment value of the tax base. It is expected that this increase
should not result in a total combined millage rate greater than in the preceding fiscal
year.
5. Appropriation of project specific expenditures from the Capital Renewal and
Replacement Fund shall be included in the City Manager's annual proposed budget,
and shall be adopted by the Mayor and City Commission annually during the City's
second public hearing on the budget.
6. Interest earnings that accrue in the Capital Renewal and Replacement Fund shall
be included in the appropriation for the Fund in the following fiscal year.
7. Changes among project specific appropriations may be authorized by the City
Manager to the extent that no new projects be added and the total annual allocation
is not exceeded.
8. Changes to project specific appropriations may be authorized by the City Manager
to the extent needed to replace $4.25 million in potential funding from the proposed
Miami-Dade County General Obligation Bond issue for Old City Hall; Sixth Street
Community Center; Flagler Monument; and Scott Rakow Youth Center
improvements.
9. During a fiscal year, changes to the total allocation and changes to the list of
projects to be funded from the Capital Renewal and Replacement Fund shall
require prior approval and authorization by a majority of the City Commission.
Excess project specific appropriations not required will be available for re-
appropriation the following year.
10. Project specific appropriations that are not expended in a given fiscal year shall
remain in the Capital Renewal and Replacement Fund for the life of the project.
11. The City of Miami Beach hereby adopts the FY 2004/05 Capital Renewal and
Replacement Fund Budget, in the amount of $1,347,070, as provided in
Attachment A.
PASSED AND ADOPTED THIS 28th DAY OF Se te
:t!b~ r M~
CITY CLERK
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
At! ~ 0; ~ '-:::.::-r
City Attom~ Date
ATTACHMENT A
Re lace Floors at Fire Stations 1 and 3
Reserves
TOTAL
CITY OF MIAMI BEACH
COMMISSION ITEM SUMMARY
m
Condensed Title:
Resolution establishing a Capital Renewal And Replacement Fund to provide a dedicated source of
funding for capital renewal and replacement projects that extend the useful life of General Fund assets;
establishing a procedure for annual appropriation of funds; establishing a procedure for their use; and
adopting the Fiscal Year (FY) 2004/05 budget for the Fund, in the amount of $1,347,070.
Issue:
Shall the Mayor and City Commission adopt the attached resolution which establishes a dedicated source
of funding, budget and a procedure for the use of a Capital Renewal And Replacement Fund?
Item Summary/Recommendation:
Adopt the Resolution.
Advisory Board Recommendation:
I
Financial Information:
Amount to be expended:
Source of Ambunt Account Approved
Funds: 1
liJpI $1 ,347,070 General Fund millage 0.126
2
3
4
Total
Si n-Offs:
Department Director
AGENDA ITEM .]1 C
DATE q-d.Z-tJ'{
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
hltp:\\cLmiami-beach. fl. us
COMMISSION MEMORANDUM
TO:
Mayor David Dermer and
Members of the City Commission
DATE: September 28, 2004
FROM: Jorge M. GOnZaleZ~7AIt .
City Manager
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, ESTABLISHING A CAPITAL RENEWAL
AND REPLACEMENT FUND TO PROVIDE A DEDICATED SOURCE OF
FUNDING FOR CITY CAPITAL RENEWAL AND REPLACEMENT
PROJECTS THAT EXTEND THE USEFUL LIFE OF GENERAL FUND
ASSETS; ESTABLISHING A PROCEDURE FOR ANNUAL
APPROPRIATION OF FUNDS; ESTABLISHING A PROCEDURE FOR
THEIR USE; AND ADOPTING THE FISCAL YEAR (FY) 2004/05 BUDGET
FOR THE FUND, IN THE AMOUNT OF $1,347,070.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
The City has and continues to make significant investment in the routine maintenance of its
assets and has earmarked approximately $27.4 million in FY 2004/05 for this effort.
However, this funding typically does not provide for major capital renewals and
replacements. Capital renewal and replacement projects are therefore often deferred
beyond the useful life of the capital component requiring replacement or renewal in some
cases until the point where bond financing is required for major improvements~ On
September 9, 2004, the Mayor and City Commission tentatively adopted the proposed
millage rate of 7.425 mills and the tentative budget for the General Fund in the amount of
$168,169,878. The General Fund millage of 7.425 mills includes 0.126 mills ($1 ,347,070)
dedicated for capital renewal and replacement.
The Administration is proposing the following restrictions and guidelines to ensure the
funds are appropriated exclusively for capital renewal and replacement to supplement
existing General Fund maintenance expenditures:
· Establishment of a permanent Capital Renewal and Replacement Fund to be used
for capital projects that extend the useful life of the City's General Fund assets. The
Capital Renewal and Replacement Fund shall be funded annually, commencing in
Fiscal Year 2004/05, through a transfer from the General Fund. The initial transfer,
for Fiscal Year 2004105, from the General Fund to the Capital Renewal and
Replacement Fund shall be the amount of $1,347,070.
· In subsequent years, the Fund will be increased by, at a minimum, the amount
which would represent the value of the debt seNice millage reduction resulting from
growth in the assessment value of the tax base. It is expected that this increase
should not result in a total combined millage rate greater than in the preceding
fiscal year.
· Appropriation of project specific expenditures from the Capital Renewal and
Replacement Fund shall be included in the City Manager's annual proposed
budget, to be approved by the Mayor and City Commission annually during the
City's second public hearing on the budget.
· Interest earnings that accrue in the Capital Renewal and Replacement Fund shall
be included in the appropriation for the Fund in the following fiscal year.
· Changes among project specific appropriations may be authorized by the City
Manager to the extent that no new projects be added and the total annual allocation
is not exceeded.
· Changes to project specific appropriations may be authorized by the City Manager
to the extent needed to replace $4.25 million in potential funding from the proposed
Miami-Dade County General Obligation Bond issue for Old City Hall; Sixth Street
Community Center; Flagler Monument; and Scott Rakow Youth Center
improvements.
· During a fiscal year, changes to the total allocation and changes to the list of
projects to be funded from the Capital Renewal a nd Replacement Fund shall
require prior approval and authorization by a majority of the City Commission.
Excess project specific appropriations not required will be available for re-
appropriation the following year.
· Project specific appropriations that are not expended in a given fiscal year shall
remain in the Capital Renewal and Replacement Fund for the life of the project.
BACKGROUND
Miami Beach has continued to expand its facilities and infrastructure in response to the
desire of so many who wish to live, work, and play in our vibrant, tropical, and historic
community. The City currently maintains a vast number and variety of buildings, structures
and facilities, hundreds of acres of recreational and open space, and hundreds of miles of
streets, sidewalks and alleys. However, existing funding levels do not provide for major
capital renewal and replacement projects and these projects often are deferred many years
beyond their useful life. Further, as a result of the current $400 million capital improvement
program, there will be a significant increase in additional maintenance needs. Over the
next couple of years, we will be bringing on line approximately 15 additional miles of
sidewalks and 22 miles of curbing; 1,924 additional streetlights and 1,043 additional up-
lights (a 30% increase combined); new parks still to be designed (Flamingo, South Pointe,
Collins, Altos Del Mar, the Garden Center, Fairway, Muss and Washington parks) - all of
which will be competing with general fund seNices as well as with rising costs due to such
factors as union contracts, personnel costs and the cost for contractual seNices.
To ensure that these projects are funded and addressed when needed, it is essential to
establish a separate capital renewal and replacement fund with a dedicated source of
funding. The FY 2004/05 proposed budget recommends the establishment ofthis reserve
with first year funding in the amount of $1.347 million to be used exclusively to provide for
renewal and replacement of capital items related to our general fund facilities and
infrastructure over and above the $27.4 million for maintenance already included in the
City's Proposed FY 2004/05 Budget. The intent of the fund would be to supplement the
existing maintenance funding to address major capital renewal and replacement needs for
general fund departments.
The proposed funding of this restricted account shall be accomplished by adding the
amount of the FY 2004/05 Debt Service Millage reduction (0.874 - 0.748 = 0.126 mills) to
the FY 2004/05 General Operating Millage (7.299 + 0.126 = 7.425). Therefore, the overall
City millage will not increase but will remain at 8.173 as it was in FY 2003/04. City property
owners will pay the same total tax millage for FY2004/05 as they did in FY 2003/04.
.. Dedicated Millage For Capital Renewal
and Replacement"
Tax Levy
FY 2003/04 FY 2004/05 Inc/(Dec)
General Operating 7.299 7.425 0.126
Debt Service 0.874 0.748 (0.126)
TOTAL 8.173 8.173 (0.000)
As assessed values in the City continue to rise over the upcoming years, the cost of debt
service on outstanding general obligation bonds will be spread over a larger value resulting
in a decrease in debt service millage each year. If the City were to continue this process,
thereby, adding the decrease in debt service millage each year to the general operating
millage until the amount of the millage associated with maintenance reached 0.5 mills, it
would generate (based on today's value of a mill) approximately $6.75 million for additional
infrastructure maintenance each year. Once this level is reached, the total millage will
continue to decrease providing room for future GO bond issuances should the Commission
and the community wish to pursue future issues.
The millage usage would be reviewed and approved each year by the City Commission as
part of the budget process.
JMG