Council briefed on $5.65M CIP cost increases; staff proposes offsets and modest CO increase
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Summary
Staff reported combined cost increases of about $5.65 million across residential, utility and thoroughfare projects, and proposed covering the gap with $2.2 million of construction-fund interest and underruns, $300,000 from the TxDOT overpass fund, a $1.75 million increase in CO bonds and smaller budget amendments to utility and sales-tax funds.
David, a city engineering staff member, presented updates to the 2025 Capital Improvements Program on Dec. 10 and reported a total projected cost increase of approximately $5,650,000 across residential, utility and thoroughfare projects.
Key project updates included an anticipated $1.8 million increase in residential street costs (including $1.75 million additional for Bon Air Phase 1), $1.65 million of increased utility project costs (Anthony Street sewer line, Northeast Water Street waterline replacement among them), and a $2.2 million increase in thoroughfare project estimates. David said some earlier project budgets dated from prior years and that recent bid prices for comparable projects informed the adjusted estimates.
Wesley Janacek, finance staff, presented options to fill the funding gap without delaying projects. Staff identified $2.2 million available in the city's construction funds composed of projected interest ($~971,000) and underruns from recent closed contracts (about $620,000 and $329,000). Staff proposed drawing $300,000 from the TxDOT overpass fund and increasing the 2025 CO bond issuance by $1,750,000 (bringing the CO total issuance to roughly $7.8 million). Wesley estimated the tax‑rate impact of the additional CO issuance would be about 0.2 cents on the tax rate — roughly $6 for a home valued at $250,000 on an annualized comparison, though staff noted the net year‑to‑year change is smaller when comparing current rates to prior-year baselines.
Staff also proposed a $730,000 utility‑fund budget amendment and a $953,000 amendment to the sales‑tax budget to cover the remaining increases. Staff said these steps would allow projects to proceed as scheduled and keep the utility fund above its minimum working capital reserve.
Council discussed alternative approaches, including phasing neighborhoods instead of whole‑neighborhood reconstructions and the tradeoffs of mobilization costs versus overall program timing. Staff noted the need to balance the benefits of holistic neighborhood reconstruction against escalating costs and contractor market constraints.
Ending: Staff requested council direction on increasing the CO issuance and confirmed staff will bring required agenda items and the notice of intent for the bond sale; no formal vote was taken on the funding adjustments during the workshop.