Mayor Nutter's Budget Update | The FY10-14 Capital Budget

The Capital Program is the City’s six-year plan for the construction and renovation of public buildings, facilities, and infrastructure. The Capital Program includes projects that promote the Mayor’s initiatives, including ensuring public safety, promoting economic development, positively impacting the City’s neighborhoods, promoting constituent services, and promoting high performing government.

City-Supported Capital Funding

The Nutter Administration is committed to investing in the City’s infrastructure, which has suffered from years of neglect. To support infrastructure investment, the City has pledged to spend $76.7 million in FY10 of City-supported capital funding. Of this amount, $63 million will be funded through new General Obligation bonds issued by the City, $7.2 million will be funded through previously authorized capital funds, and $6.5 million will be funded through pre-financed PICA loans. The chart shows City support of the Capital Budget in FY10, compared to prior years:

Major Capital Program Projects

While the City is committed to investing in its infrastructure, the City’s ability to do so is restricted by both the State Constitutional debt capacity and the City’s financial capacity. Under the Pennsylvania Constitution, the City’s total debt capacity is limited to 13.5% of the ten year average of the annual assessed valuations of taxable realty in the City. As of March 2009, the City’s remaining debt capacity was $119 million. The Board of Revision of Taxes, following a recommendation made by the Tax Reform Commission, is moving toward 100% assessment of real-estate properties. When assessments increase, the 10-year moving average of assessment values used to determine the constitutional debt limit would subsequently increase. Nevertheless, the City’s ratio of debt service to obligations will continue to restrict its ability to issue General Obligation (GO) debt. A relatively high ratio of debt service to obligations will not only crowd out other operating expenditures, but if the ratio gets too high, it could also result in a reduction of the City’s bond rating, thereby increasing the costs of borrowing.

Capital Budget Funding Sources

The total cost for the 76 projects included for FY10 is nearly $2.5 billion (including Water and Airport projects). These 76 projects include several hundred “subprojects” that are either new or “carried forward” from previous years’ budgets.

Of this total budget amount, $63 million is provided by new GO bonds issued by the City of Philadelphia. These bonds are tax-supported (i.e., repaid from the City’s general tax revenues). An additional $228.4 million will come from carried forward City tax-supported loan funds.

Other City sources total $118 million. City “self-sustaining” loans account for nearly $1.3 billion of total budget-year funds. Funding from other levels of government, including Federal, Commonwealth of Pennsylvania, and regional sources, totals $711.1 million in the budget year. Finally, $80.7 million of FY10 funding will be provided by private sources.

Capital Budget Uses of Funds

In keeping with the City’s priorities, the Recommended FY10-15 Capital Program includes projects that promote the City’s strategic initiatives for sound finances, a safe city, a smart population, and excellent government service. A sampling of capital projects that support these priorities is presented below.

Projects that ensure sound finances strengthen fiscal integrity and stability now, and help to avoid unnecessary costs in the future:

A total of $4 million, including $3.6 million in new City funds, and $400,000 in other pre-financed loans, will fund the Division of Technology’s Network Infrastructure Stabilization and Enhancements for the City’s computing foundation, improving business operations across agencies.
$500,000 of new City funding will enable Energy Efficiency Improvements through the Office of Sustainability. This funding coupled with carried-forward loans from previous years, will enable energy efficiency improvements at locations across the City, Energy Star Building upgrades, and Green Lights Lighting upgrades.
The recommended budget also includes $665,000 in new City funds for city-wide Environmental Remediation through the Department of Public Property, including asbestos abatement and environmental consultant services city-wide regarding storage tank testing and replacements.
A total of $9.6 million in new City funds and PICA pre-financed funds enable Quadplex Facility Improvements (City Hall, Municipal Services Building, One Parkway Building, and Criminal Justice Center) through the Department of Public Property.

Projects that provide for a safe city increase the feeling of safety from crime, emergencies, and accidents at home, school, in the neighborhood, and at work and play:

$890,000 in new City funds will be used for critical window and door and roof replacements, mechanical, and electrical and plumbing renovations at 14 Police Stations.
Prisons will use $3.6 million in new City funds for much-needed Prison Facility renovations including ventilation and mold remediation at the Curran Fromhold detention facility, and an automatic lock security system, critical multi-phase mechanical, electrical and plumbing restoration, and fire alarm system at the House of Correction.
A total of $10 million in new City funds and pre-financed loans will fund Street Reconstruction and Resurfacing across the City’s neighborhoods.

Projects that promote a smart population ensure that Philadelphia is a city of well-educated individuals and active participants in the new world economy:

The Commerce Department’s Commercial Development projects total $3 million in FY2010 for upgrades to Neighborhood Commercial Centers for curbs, sidewalks, lighting, landscaping and other complements to public and private reinvestment.
The Commerce Department will also use $7.5 million in federal, state and new City funds for Navy Yard Infrastructure, in support of public and private development.
Free Library Improvements for FY10 totaling $965,000 in new City funds will upgrade and enhance Libraries serving the public across the City. Included are much-needed HVAC and Boiler system replacements at several branches.
SEPTA Bridge, Track, Signal and Infrastructure Improvements secure access to work and other destinations for Philadelphia’s population. In FY10, $105 million in state, federal, city, and other monies will be used for the Market Elevated Reconstruction, and Regional Rail substation, bridge and signal improvements.

Projects that promote excellent service create a high performing government, known for great customer service and a high level of integrity:

In FY10, $505.3 million from federal, state, private and city self sustaining funds will enable Philadelphia International Airport Terminal Expansion and Modernization, Airfield Renovations and Additions, and enhancements to baggage inspection to provide faster and better service for the growing demand of air traffic in and out of Philadelphia.
Fairmount Park Site Improvement projects total nearly $16 million from multiple sources in FY10 for new amenities on the Parkway, drainage improvements on parkland to stabilize embankments, natural terrain and pathways, tree planting and play area improvements.
$630,000 of new City funds will fund Health Facility Renovations at various Health Centers around the city to improve service, safety, and longevity of buildings.
SEPTA - New Payment Technologies will be funded with nearly $24 million in state, federal, new City funds, and other governments. This new fare system will replace the entire array of current collection equipment, providing better service to SEPTA’s riders throughout the region.