River Falls reviews $19.2 million 2026 capital plan and fiscal strategy, seeks council confirmation of levy and reserve targets

At a River Falls City Council workshop, finance staff presented an abbreviated Capital Improvement Plan (CIP) for 2026 and an accompanying fiscal plan, outlining roughly $19.2 million in proposed capital projects and asking the council to confirm policy directions for the tax levy and fund balances.

The presentation, led by finance staffer Josh, focused on one-year 2026 project funding and the assumptions behind the city’s longer-range fiscal modeling. Josh said the city pared the usual five-year CIP to a single-year plan because “given the amount of work that's going on across city staff right now, we thought we'd present just the 2026 year.” He asked the council to confirm policy targets including a net tax-levy increase of no more than 4% and a minimum unassigned general fund balance of 40% with a 50% target.

The CIP highlights and funding mix

Staff said facilities account for the largest portion of the 2026 CIP. The largest single expenditure is the planned fire station construction, which staff said represents most of about $9.5 million allocated to facilities; $500,000 for design was previously budgeted. Other major 2026 projects mentioned included:

- Library capital campaign and foundation projects: $2.3 million. - Locust Street extension (Grove Street West to Apollo Road, with sidewalk to Winter Street) and related electrical upgrades: about $950,000; funding proposed as a mix of developer contributions and utility financing because the work benefits sewer and electric systems. - Highview Electric Improvements, Phase 1: roughly $400,000 to install about 3,000 feet of underground cable to increase electric system resiliency. - Paulson Road streetlight replacements (TID-funded): about $257,000 (TID #13) to replace aging lights between Riverside Drive and Whitetail Boulevard. - Lometi (Lumetti) interceptor design: design-only in 2026 at about $222,000; the full project would replace roughly 2,000 feet of clay sewer main with 24-inch PVC and continue the North interceptor project. - Smaller items called out: fiber extension to the police department, patrol vehicle and taxi-van replacements, Kinney Corridor implementation, and ongoing utility capital inventory purchases.

Staff noted utility cash financing would account for roughly $3.3 million of CIP funding, with other sources including levy-backed borrowing, grants and donations, unassigned fund balance (a sizable portion applied to the fire station), and a smaller “other” category (developer contributions, insurance proceeds and taxi fund resources) of about $527,000.

Borrowing approach and levy impacts

Josh said the city may proceed with a larger general-obligation borrowing that would include construction for the Lometi phase 1 project but would be repaid with utility revenues (revenue-backed G.O. debt). He explained two reasons the city sometimes issues general-obligation debt that is satisfied by utility revenues: lower interest rates associated with the broader tax base and a beneficial interaction with state levy-limit formulas that can increase capacity.

Staff reported an anticipated fire-station borrowing of about $7 million (an increase from prior estimates). Josh said the net city-portion levy impact of the borrowing and other shifts would be modest — roughly a $25 per year change on an average-valued home when the full package comes into effect — and that the city is proposing to levy about $91,000 less for 2026 than earlier projections indicated. That lower levy proposal reflects stronger-than-expected assessed values after a recent revaluation (assessed value estimated near $1.95 billion and equalized value reported above $2 billion) and use of available cash instead of borrowing for some one-time costs.

Mill-rate estimate and tax-bill context

Using the proposed levy and the updated assessed values, staff presented a city-only mill-rate calculation (excluding TID and other taxing jurisdictions) that staff estimated would reduce the average city portion of the tax bill by about $48 compared with last year’s city-only calculation. Josh cautioned that individual bills will vary by county and property, and that the TIF/TID components and other jurisdictions’ levies were not included in the estimate.

Fiscal-plan assumptions and policy checks

Staff requested council confirmation on several assumptions used in the fiscal modeling:

- Net tax-levy increase limit of no more than 4% (net of new construction growth). Josh stated, “we still assume … you do not want to increase the net tax levy by more than 4%.” - Unassigned general-fund minimum of 40% of budgeted expenses, with a working target of 50%. - Total general-obligation indebtedness modeled to stay within the council goal of 2.5% of equalized value (the city noted the state statutory limit is 5% of equalized value). - Wage and benefit assumptions used in models: 2% wage growth and 6% benefits inflation (staff noted the current health-insurance renewal was coming in below 6%). - Operating-cost inflation assumption: 2%.

Utilities and other funds

Staff reviewed utility finances and recent rate changes. The council was reminded that electric, water and sewer rates were adjusted earlier in 2024; staff said the adjustments addressed working-capital and debt-coverage concerns and put the utilities back above policy thresholds (90 days working capital for utilities; 1.5x revenue coverage for utility debt service in council policy; some water utility covenants require 1.25x). For 2026 projections, staff included various cash-financing amounts for utilities (electric projects ~$1.6 million, water capital cash financing ~$637,000, sewer capital cash financing ~$909,000) and said utility metrics were improving after the rate changes.

Tax increment districts and other balances

Staff presented TID forecasts and said most TIDs show healthy forecasted closures, but two (the downtown hotel TID, referred to as TID #6, and the Winfield United TID) were not currently forecasted to close with positive balances; staff characterized the forecasted shortfalls as not large and said both districts close in 2032 and 2036 respectively, giving time to develop strategies. The city reported consolidated cash (excluding bond proceeds) of roughly $37.8 million in 2024, an increase of about $10.3 million over the prior roughly ten-year period.

Risks, next steps and council feedback

Staff listed potential downside risks in the forecasts: national or state economic slowdown affecting shared revenues and development, weaker-than-expected net new construction, fewer utility customers than planned, changes to state shared-revenue and transportation-aid formulas, and other unforeseen demands on fund balance.

Next formal steps described by staff include bringing the 2026 portion of the CIP and fiscal plan back for council action at future meetings and seeking approval for the 2026 operating budget in the October–November budget cycle. Council members asked clarifying questions about cash-versus-borrowing choices, early retirement of bonds, and the composition of growth assumptions; several members complimented staff on the presentation.

Ending

Staff left the council with two specific confirmations requested: that the council is comfortable continuing to incentivize and plan for measured growth (which underpins portions of the fiscal plan) and that the council affirms the policy parameters described (the 4% net-levy cap and the 40%/50% fund-balance minimum/target). Staff said they would return with formal ordinance and budget actions in subsequent meetings.