Council reviews capital projects, TIFs and road program funding

City staff gave a multi-part capital update that covered recent completions, tax-increment financing (TIF) funds, small capital funds and a four-year capital outlook.

Bill Hanna summarized debt and sales-tax context: the City’s total bonded debt declined from about $109,000,000 four years ago to an estimated $82,000,000 at the end of the current fiscal year, with remaining general-obligation issuances amortizing through 2042 at roughly $6–7 million per year unless refunded. Sales-tax receipts remain the largest single general-fund revenue source (~48%), followed by property taxes (~24%) and intergovernmental revenue.

Staff reviewed small funds and capital categories: police and fire pension trust funds (discussion of funded percentages and actuarial-driven contribution components), a liability/workers’ compensation fund, internal Vehicle Garage & Replacement Fund (replacement reserve rising from $1.5M to $1.75M), an IT equipment replacement fund, and the motor fuel tax (MFT) fund (estimated ~$1.5M annual receipts). Hanna said staff proposes using $2.3M of MFT fund balance this year to support the road program as a one-time measure.

TIFs were a focal point. Staff said First Street TIF (TIF 4) carries just over $23,000,000 principal outstanding and will see a scheduled annual debt-service increase (from about $1.1M to $2.1M in two years) after a district extension; downtown TIF (TIF 7) is growing increment and expected to support projects such as Berry House rehabilitation, Southeast Quadrant engineering and angled parking on Cedar. Manufacturing TIF (TIF 5) was largely paid off about two years ago and continues to repay internal city loans.

On the capital project list for 2026 staff highlighted road work (Southgate Road reclamation with water main replacement), Lot B (Pollyanna) parking-lot replacement, Illinois Street bike/pedestrian improvements and ADA intersection work, flashing beacons (DCEO grant), APS signal engineering for ADA upgrades, the Indiana Pedestrian Bridge engineering phase, the long-standing State Street Creek storm/flood project, culvert replacements and Red Gate Bridge railing replacement. Staff also described parking-deck repairs and a recommended parking-counter system and digital wayfinding signs to improve upper-floor utilization.

Staff presented pavement-condition improvements: PCI (pavement condition index) rose from about 51 (2022) to about 62 (2025) after the 0.5% sales-tax increase dedicated to roads; staff cautioned that future miles completed may fall because remaining streets require deeper rehabilitation and concurrent utility work.

Questions from council covered grant eligibility for projects, whether the City can set aside multi-year project reserves (yes, through the capital projects fund), and whether capital priorities could be temporarily reallocated to lower near-term rate impacts (e.g., shift some road funds to lead-service-line work). Staff said enterprise costs are best retained in their respective funds but that staff can explore temporary offsets where prudent.

Next steps: staff will provide more granularity on grant eligibility, project phasing and a formal fund-balance policy for council consideration.