Of Capital Projects 40

SUFFOLK COUNTY LEGISLATURE Robert Lipp BUDGET REVIEW OFFICE Director May 15, 2015 DuWayne Gregory, Presiding Officer and Members of the Suffolk County Legislature Dear Legislators: Accompanying this letter is the Budget Review Office Review of the 2016-2018 Proposed Capital Program and 2016 Capital Budget. Highlights of this report can be found in the Introduction immediately following the Table of Contents. The focus of this year’s proposed capital program is on two big ideas – nitrogen reduction and economic development. These initiatives are likely to take years to complete, and as is often the case, may increase in scope and cost. Meanwhile, the County has many other capital needs and resources are limited. With that in mind, we offer several recommendations to advance funding for projects that in our view should not be deferred. The details are found in our individual capital project write-ups. Given the limited time we had to put together this report, as always, a compilation of all Budget Review recommendations will not be available for a few days. On a personal note, I would like to thank the entire staff of the Budget Review Office for their hard work and long hours in preparation of this report. I am confident you will find the quality of this report up to Budget Review Office standards. The credit for our work effort goes to each and every member of the Budget Review Office. My staff and I remain ready to provide whatever assistance the Legislature may require during the capital program and budget evaluation and amending process. Sincerely, Robert Lipp, Director Mailing Address: P. O. Box 6100, Hauppauge, NY 11788-0099 (631) 853-4100 FAX: (631) 853-5496 e-mail: [email protected] SUFFOLK COUNTY LEGISLATURE DuWayne Gregory, Presiding Officer Jay H. Schneiderman, Deputy Presiding Officer District 1 Al Krupski 2 Jay H. Schneiderman 3 Kate M. Browning 4 Thomas Muratore 5 Kara Hahn 6 Sarah S. Anker 7 Robert Calarco 8 William J. Lindsay, III 9 Monica R. Martinez 10 Thomas Cilmi 11 Thomas F. Barraga 12 Leslie Kennedy 13 Robert Trotta 14 Kevin J. McCaffrey 15 DuWayne Gregory 16 Steven H. Stern 17 Lou D’Amaro 18 William Spencer Clerk of the Legislature Tim Laube Counsel to the Legislature George Nolan SUFFOLK COUNTY LEGISLATURE The Budget Review Office Robert Lipp, Ph.D. Director Rosalind Gazes Deputy Director Joseph Schroeder Energy Specialist Michael Crowell Senior Economist Craig Freas Senior Legislative Analyst Jill Moss Senior Legislative Analyst John Ortiz Senior Legislative Analyst Robert Doering Legislative Analyst Benny Pernice Legislative Analyst Cary Flack Office Systems Analyst IV Laura Halloran Assistant Legislative Analyst Joseph Muncey Assistant Legislative Analyst Anthony Oliveto Office Systems Analyst II Massiel Fuentes Research Technician Janice Lawlor Office Systems Technician Andrew Tarantowicz Legislative Technician Sharen Wagner Principal Clerk Assistance from the Clerk’s Office Laura Provenzano Web and Social Media Administrator TABLE OF CONTENTS Section Page Introduction I-II Funding Sources and Major Initiatives 1 Analysis of the Proposed Capital Program 8 The Economy 15 Suffolk County Land Acquisition Programs and Policies 22 New Health Center Projects 29 Capital Projects Included in the Proposed Capital Program and Budget As Previously Adopted and Requested by Departments 33 Select Project Status Updates 36 Debt Service Impact 39 Index of Capital Projects 40 Individual Capital Project Reviews 51 2016-2018 Proposed Capital Program Schedule 531 Introduction “First, have a definite, clear practical ideal; a goal, an objective. Second, have the necessary means to achieve your ends; wisdom, money, materials, and methods. Third, adjust all your means to that end.” Aristotle The focus of the Proposed 2016-2018 Capital Program is on two big initiatives – nitrogen reduction and economic development. There are five nitrogen reduction projects proposed at a combined cost of $352.9 million, all in 2016, plus $22.1 million in planning and design that is anticipated to be authorized this year. All five are funded by “Other Aid and Local Match” (O) and expect to receive some combination of grant funds and low interest loans from the Environmental Facilities Corporation (EFC). As for economic development, there are at least 18 projects that meet the description, three of which are new. The emphasis here is on infrastructure improvements to roads and sewers, with an emphasis on downtowns. Proposed spending totals almost $33 million in 2016 and $242.7 million over five years. Funding is for the most part a mixture of sewer bonds, non-sewer bonds and federal aid. These are significant undertakings whose costs may be substantially higher as the details are worked out over time. Their success is also contingent upon being able to secure large sums of state and federal aid, and then come up with local sources of revenue to pay the debt service on County bonds. The challenge is made more difficult in the short run due to our assessment of the economy that is included in this report. Sales tax continues to lag, with year to date growth barely positive. As a result, 4.62% growth would be needed for the remainder of the year in order to attain the 3.5% growth rate implicit in our latest budget model forecast, which was presented at the April 22, 2015 meeting of the Budget and Finance Committee. Analyzing the proposed capital program this year is made more difficult because of all the proposed changes in funding sources – there are two new sources, “Referendum Bonds” (R) and “Southwest Fund 405” (SW); one that is eliminated, FEMA (FE); and one that includes a significant increase and expanded definition, Other Aid and Local Match (O). In terms of local spending, serial bonds (B) and referendum bonds (R) combined are approximately the same as the previous year, down $174,637 from the 2015 adopted level. Over five years (2016- 2018, SY) proposed borrowing is down $82,892,944. The decrease can be attributed to approval by the NYS Commission on Correction to postpone construction of Phase II of the jail (CP 3008). Last year, the Adopted 2015-2017 Capital Program included $2 million in 2015, $55 million in each of 2016 and 2017, and $2 million in SY for this project. From the perspective of the impact on future operating budgets, there is some good news. Proposed serial bond debt for mostly General Fund purposes is less than last year’s adopted capital program. General Fund pipeline debt is $16.2 million less than last year ($223.8 million now compared to $240 million last year). I Adopted resolutions to appropriate funding for capital projects, excluding sewers, has trended down over the past six years. In 2009, $227.3 million was appropriated and in 2014 the amount was $98.9 million, a decrease of $128.4 million. The challenge facing the County is to come up with the means to pay for these ambitious initiatives. The challenge is made all the more difficult by having to address an operating budget deficit that in April was projected at $176 million though the end of 2016. Introduction RL16 II Funding Sources and Major Initiatives Funding Sources and Major Initiatives The proposed capital program includes two new funding sources, “Referendum Bonds” (R) and “Southwest Fund 405” (SW), and eliminates “FEMA” as a separate category (FE). The proposed capital program also includes a significant increase and expanded definition for “Other Aid and Local Match” (O). The focus in this section of our report will be to better understand these funding source changes and to categorize them as either local spending or State and Federal aid. In addition, there are two major initiatives that need clarification to better understand what is being proposed. Our emphasis here will be on capital projects designated as (1) Nitrogen Reduction and (2) Economic Development. Proposed Funding Sources (Table 1) The Proposed 2016 Capital Budget totals $536,099,803. The 2016 amount is what matters most, since that is the only year in the proposed capital program that the Legislature can act on as it appropriates funding for capital projects next year. As a planning document, the proposed capital program plans to spend $1,005,757,263 over three years (2016-2018) and $1,308,157,521 over the next five years (2016-SY). In terms of local spending, serial bonds (B) and referendum bonds (R) represent debt that for the most part is an obligation of the General Fund. These two funding sources combined total $118,855,691 in 2016, $363,458,601 for the proposed three year program and $536,758,730 over the proposed five year program. Table 1 Proposed 2016-2018 Capital Program By Funding Source and Program Year 3-Year 5-Year 2015 Funding Source 2016 2017 2018 SY Program Program Modified (2016-2018) (2016-SY) Assessment Stabilization Fund A $1,600,000 $1,700,000 $1,350,000 $1,750,000 $0 $4,800,000 $4,800,000 Serial Bonds B $119,029,486 $89,455,691 $141,598,934 $103,003,976 $173,300,129 $334,058,601 $507,358,730 Federal Aid F $15,635,343 $28,897,383 $46,741,300 $37,192,500 $104,690,129 $112,831,183 $217,521,312 FEMA FE $0 $0 $0 $0 $0 $0 $0 General Fund G $96,000 $0 $0 $0 $0 $0 $0 Other Aid and Local Match O $2,500,000 $352,900,000 $1,050,000 $500,000 $19,500,000 $354,450,000 $373,950,000 Referendum Bonds R $0 $29,400,000 $0 $0 $0 $29,400,000 $29,400,000 State Aid S $44,264,261 $8,246,729 $3,879,500 $3,841,250 $1,410,000 $15,967,479 $17,377,479 Southwest Fund 405 SW $2,000,000 $5,600,000 $20,000,000 $45,000,000 $0 $70,600,000 $70,600,000 Interfund Transfers

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