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Review of the Proposed Capital Program 2017-2019 Capital Budget

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Review of the Proposed Capital Program 2017-2019 Capital Budget SUFFOLK COUNTY LEGISLATURE Robert Lipp BUDGET REVIEW OFFICE Director May 13, 2016 DuWayne Gregory, Presiding Officer and Members of the Suffolk County Legislature Dear Legislators: Accompanying this letter is the Budget Review Office Review of the 2017-2019 Proposed Capital Program and 2017 Capital Budget. Highlights of this report can be found in the Introduction immediately following the Table of Contents. The focus of the proposed capital program, as was the case last year, is sewer expansion and Connect Long Island economic development initiatives. 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. A compilation of all Budget Review recommendations will be made available in 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 Robert Calarco, Deputy Presiding Officer District 1 Al Krupski 2 Bridget Fleming 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 Jason Richberg Counsel to the Legislature George Nolan SUFFOLK COUNTY LEGISLATURE The Budget Review Office Robert Lipp, Ph.D. Director Rosalind Gazes Deputy Director Benny Pernice Chief Legislative Analyst Joseph Schroeder Energy Specialist Cary Flack Office Systems Analyst IV Michael Crowell Senior Economist Craig Freas Senior Legislative Analyst Jill Moss Senior Legislative Analyst John Ortiz Senior Legislative Analyst Robert Doering Legislative Analyst Laura Halloran Legislative Analyst Laura Provenzano Web and Social Media Administrator 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 TABLE OF CONTENTS Section Page Introduction I-II Analysis of the Proposed Capital Program 1 The Economy 7 Suffolk County Land Acquisition Programs and Policies 14 Capital Projects Included in the Proposed Capital Program and Budget As Previously Adopted and Requested by Departments 20 Select Project Status Updates 24 Debt Service Impact 26 Index of Capital Projects 27 Individual Capital Project Reviews 36 2017-2019 Proposed Capital Program Schedule 472 Introduction “For an economy built to last we must invest in what will fuel us for generations to come. This is our history - from the Transcontinental Railroad to the Hoover Dam, to the dredging of our ports and building of our most historic bridges – our American ancestors prioritized growth and investment in our nation's infrastructure.” Cory Booker (NJ Senator) Highlights of the Proposed 2017-2019 Capital Program include how much is planned to be spent and what major initiatives are included in the program. As for proposed spending, the overall cost across all funding sources totals $220.1 million in the first year (2017), $1.1 billion over three years (2017-2019) and in excess of $1.5 billion over five years (when SY is included). In comparison to last year’s adopted program, the three-year capital program is $45.5 million more and the five-year program is $177.5 million higher. Comparing the first year of the proposed program (2017) to the first year of the Adopted 2016-2018 Capital Program (2016) would be misleading because of the four nitrogen reduction projects. Last year those projects were funded at $352.9 million in 2016. That timeline proved to be too optimistic, and funding is now scheduled for 2018. The focus of the proposed capital program, as was the case last year, is sewer expansion and Connect Long Island economic development initiatives. In particular, Sewer Expansion: There are nine projects that can be categorized as sewer expansions, four are nitrogen reduction projects, two are new projects and three can be categorized as economic development projects. The nitrogen reduction projects are: the Forge River Nitrogen Reduction Project (CP 8134), Carlls River Nitrogen Reduction Project (CP 8139), Connetquot River Nitrogen Reduction Project (CP 8157), and Patchogue River Nitrogen Reduction Project (CP 8196). A fifth project provides planning funds for the four (CP 8197-Planning and Design for Nitrogen Reduction Projects). Funding totals $349.8 million, all in 2018, and is financed by a combination of sewer district serial bonds (X), federal aid (F) and NYS EFC low interest loans, which will have to be paid back, presumably with sewer bonds (X). The two new sewer projects are MacArthur Industrial (CP 8102) and Sayville Extension (CP 8106). MacArthur Industrial would be a new sewer district and Sayville Extension would be an extension of Southwest Sewer District. Both would be financed with sewer serial bonds (X). Most of the funding for these two projects is in SY – total cost for the two projects combined is $60.5 million, of which $55 million is in SY. The last three sewer expansion projects can be characterized as components of economic development initiatives. Those projects are: the Ronkonkoma Hub (CP 8156), Huntington Station Hub (CP 8195) and Riverside Revitalization (CP 8193). The first two are planned to connect to the Southwest Sewer District, while Riverside would apparently require the creation of a new sewer district. All three are proposed to be funded with sewer bonds (X) - $25 million in 2017 for the Ronkonkoma Hub, $20 million in 2018 for Huntington Station Hub, and $2 million in SY for Riverside Revitalization. Until each of these proposed sewer systems are established as part of a new or existing County sewer district, they would not be eligible for sewer bonds (X). For the I ones expected to connect to Southwest, it is unclear whether or not it would be appropriate for those currently within the District to be charged for the cost associated with expanding the District, if that option is the one chosen. Connect Long Island (excluding highway related projects) There are seven projects that further the goals of the Connect Long Island Initiative. This includes creating incentives for businesses to locate here (CP 6427-Start-Up NY/Suffolk County) and projects that construct affordable workforce housing (CP 6411-Infrastructure Improvements for Workforce Housing/Connect Long Island, CP 6424-Jumpstart Suffolk/Connect Long Island, CP 8704-Acquisition of Land For Workforce Housing), or in an ancillary way, increase the aesthetics and walkability of downtowns (CP 6412-Suffolk County Downtown Revitalization Program), and provide trails for hiking and biking (CP 5903-Construction of The Port Jefferson-Wading River Rails To Trails Pedestrian And Bicycle Path and CP 7191-Connect Trails-Suffolk County). CP 6424 can be used for a variety of economic development purposes. The proposed capital program includes a total of $49,880,000 in funding for these seven projects. CP 5903 is scheduled to receive 95% federal aid, and the other six are funded entirely with serial bonds (B). Connect Long Island Highway Projects Highway projects relevant to the Connect Long Island Initiative include (1) CP 5040-Intersection Improvements CR 19 Patchogue-Holbrook Road at Old Waverly Avenue, Town of Brookhaven and (2) CP 5597-Connect Long Island - Nicolls Road and the Izone. In addition, two new projects are CP 5598-Connect Long Island-NYS Route 110 BRT and CP 5660-Improvements to Transportation Oriented Facilities-Connect Long Island. Most of these projects are in the preliminary stages of planning and design. Therefore, the viability of a fully accomplished Connect Long Island, as envisioned, is not yet clear. The objective is to modify roadways to allow for multimodal transportation. Modifications include the addition of bus lanes and signal prioritization for Bus Rapid Transit, hiking and biking trails along roadways; and train station and hub revitalization. This is to promote efficient interconnectivity between pedestrian, bus, train, and airport modes of travel. The proposed capital program includes $224.4 million for these four projects, of which 80% or $179.7 million is financed with state and federal aid and the remaining 20% or $44.7 million is financed with serial bonds (B). Proposed funding is $115.4 million more than last year, primarily due to a re-scoping of CP 5597 and addition of a new project, CP 5598. Finally, in terms of the operating budget impact of the capital program the news is mixed. The bad news is that General Fund serial bond debt service costs are at an all-time high, totaling $127.6 million in 2016. The good news is that debt service is expected to decrease by more than $7 million in 2017, by an additional $700,000 in 2018 and by $2.6 million in 2019. The challenge facing the County is to come up with the means to pay for these ambitious initiatives.
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