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HomeMy WebLinkAbout03/09/2026 - Meeting Materials (3) Overview of Capital Improvement Program (CIP) Major Funding Sources General Fund Dollars (Mostflexible funding source;can be spent on any project) These are the City's most flexible unrestricted funds available to be spent on any CIP project.The Council transfers a portion of General Fund revenues into the CIP Fund as part of each annual budget in June. The City collects a variety of revenue sources that all go into the General Fund such as property taxes, sales taxes,franchise taxes,building permits and license fees,and many others.A Council audit identified 9%of ongoing General Fund revenues as an ideal funding level to help ensure the City keeps up with capital investment needs.The City reached that 9%funding level in FY2023 and FY2025.Between FY2o16—FY2026,the City's annual General Fund transfer into the CIP Fund averaged 7.6%. Funding Our Future o.5%Salt Lake City Local Option Sales Tax (Funding is eligible for five critical need categories:housing,public transit,streets,and public safety;a fifth category ofparks maintenance was added in FY2o23) The 0.5%sales tax increase was authorized by the Legislature only for the capital city as part of the State prison relocation from Draper.The City's local option sales tax was increased as part of the FY2o19 annual budget and was branded"Funding Our Future"along with a Streets Reconstruction Bond approved by voters(all those bond funds have now been budgeted).Prior to enacting the sales tax increase the City conducted impact research,public hearings, open houses,workshops,letters, online information, and other extensive outreach.The funds from the sales tax are limited to the critical need categories as determined by the Council.The definition of the critical need categories has evolved such as expanding public safety from only police to also include 911 dispatch,fire, medical,social workers, and traffic calming.The number of categories was originally four and a fifth category,parks maintenance,was added in FY2023.There is no legal limitation on the categories which are set during the Council's annual appropriation process and subject to change. Class C Funds (State gas tax) Class C funds are generated by the Utah State Tax on gasoline.The state distributes these funds to local governments on a center lane mileage basis.The City's longstanding practice has been to appropriate Class C funds for the general purpose of street reconstruction and asphalt overlays.Multiple departments and division collaborate to select specific street segment locations based on a variety of factors including overall condition index(OCI),other capital projects planned in the same area,and private development among others.Note that there is significant overlap in eligible uses between this funding source and the County Quarter Cent and 5tn 5tn Sales Taxes for Transportation and Streets Funding(see next section). Per state law,Class C funds may be used for: 1. All construction and maintenance on eligible Class B&C roads 2. Enhancement of traffic and pedestrian safety,including,but not limited to:sidewalks,curb and gutter,safety features,traffic signals,traffic signs,street lighting and construction of bicycle facilities in the highway right-of-way 3. Investments for interest purposes(interest to be kept in fund) 4. Equipment purchases or equipment leases and rentals 5. Engineering and administration costs 6. Future reimbursement of other funds for large construction projects 7. Rights of way acquisition,fencing and cattle guards 8. Matching federal funds 9. Equipment purchased with B&C funds may be leased from the road department to another department or agency 1o. Construction of road maintenance buildings,storage sheds,and yards.Multiple use facilities may be constructed by mixing funds on a proportional basis 11. Construction and maintenance of alleys 12. B&C funds can be used to pay the costs of asserting,defending,or litigating County Quarter Cent(0.25%) and"5th 5tw"(0.20%)Sales Taxes (Limited to transportation and streets eligible uses per state law) The countywide fourth quarter-cent and 5th 5th are ongoing sales taxes dedicated to transportation and streets.The City has taken a progressive view of transportation beyond a vehicle-focused perspective and uses a multi-modal,more inclusive approach(walking,biking,public transit,accessibility and ADA,ride- share,trails,safety,scooters,etc.).State law requires that these funds are used for new projects and programs;it may not be used to supplant existing budgets for transportation projects and programs. Per Utah Code section 59-12-2212.2 both sales taxes may be used for: 1. Development,construction,maintenance or operations of streets,alleys,and thoroughfares of any kind including connected structures, 2. Traffic and pedestrian safety infrastructure covering sidewalks,curb and gutter,signs,signals, and lighting, 3. Active transportation facilities and multimodal transportation such as urban trails for nonmotorized vehicles(bikes,scooters,wheelchairs), 4. Public transit systems, 5. Corridor preservation for projects or facilities related to the above uses, 6. Debt service on bonds that construct projects or facilities related to the above uses, 7. The law also includes a broad allowable use for"all other modes and forms of conveyance used by the public." Revenue from the 0.25%sales tax is split: o.1o%for the Utah Transit Authority or UTA,o.1o%for cities and 0.05%for Salt Lake County as of July 1,2019 and afterwards.The 0.20%sales tax is split 0.05%to State transit projects,0.05%to County transit projects,0.05%to cities,and 0.05%to Salt Lake County. Note that there is a significant overlap in eligible uses between these sales taxes and Class C funds. Impact Fee Eligibility (Four types:fire,parks,police,and transportation/streets.Public Utilities has separate impactfee types) Impact fees are one-time charges imposed by the City on new development projects to help fund the cost of providing infrastructure and services to that new development.This is part of the City's policy that growth should pay for growth.To be eligible,a project,or a portion of a project,must be deemed necessary to ensure the level of service provided can continue with the additional demands of the new developments(such as serving more residents or workers).As a result,it's common for a project to only be partially eligible for impact fee funding(the growth-related portion)so other funding sources must be found to cover the difference.For example,a project that is 50%eligible would need 50%of funding from sources other than impact fees.It is important to note that per state law,the City has six years from the date of collection to spend or encumber under a contract the impact fee revenue.After six years,if those fees are not encumbered or spent then the fees are returned to the developer with interest. General Impact Fee Guidelines: 1. Impact fees are to be used to keep a current level of service for new growth to a City. 2. Cannot be used to cure deficiencies serving existing development. 3. May not raise the established level of service in existing development. 4. Impact fees can only be used to pay for the portion of the project directly attributable to growth (it's uncommon for projects to be t00%eligible for impact fees). 5. Must be incurred or encumbered within 6 years from the date they are collected,or they shall be returned to the payer with interest payments per state law. 6. Must use an adopted Impact Fees Facilities Plan to determine the public facilities needed to serve new growth and set fee amounts by development type. 7. Maintenance,repair,and replacement projects are not growth related. 8. Upgrade projects are not growth related. 9. Repair,replacement,or upgrades can be included as part of a mixed project where the scope will create increased capacity to serve projected growth. 1o. Impact fees must be spent in the same geographic boundary(service area)in which they are collected.The City's Impact Fee Facilities Plan designates the entire city as the service area.The Transportation section was updated in 202o.The other three sections were adopted in 2016.