FY 2008 Comprehensive Annual Financial Report

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These two industries combined are projected to grow 25%, well above the countywide average of 14.8%, over the next five years. These emerging industries owe much of their growth to connections with the University of Oregon. Many owners, employees, and researchers of these businesses have~ties with the university. Some have worked there; others have attended. The symbiotic relationship between the university and research and support industries has helped these industries grow and produce or contribute to the success of many new and innovative businesses. Health care and business/professional services job creation will also continue positive growth in the coming years. ~' Long-term Financial Planning The City of Eugene recognizes the importance of strategic long-term financial planning. Each year, forecasts are prepared to estimate the financial health of each major fund out over the next six years. These forecasts are included in the published budget document. The City also utilizes three additional important planning documents: ) the Capital Improvement Program, the Multi-Year Financial Plan and the Debt Affordability S u y. In March 2007, the City Council approved the Capital Improvement Program for FY08 to FY13. The Capital Improvement Program (CIP) forecasts the City's capital needs over asix-year period based on various long-range plans, goals, and policies. The underlying strategy of the CIP is to plan for land acquisition, construction, and major maintenance of public facilities necessary for the safe and efficient management of City assets. A critical element of a balanced CIP is the provision of funds to preserve or enhance existing facilities and provide new assets which will help the City respond to changing service needs and community growth. The program serves as the basis for the capital budget and is updated every two years. The FY08-13 CIP totals about $175 million in projects with funding secured or identified from a variety of sources. Under the program just over $51 million in anticipated capital spending will be for parks and open space projects, with neighborhood and community park acquisition and development accounting for over $39 million of this amount. Transportation is the second largest category with over $20 million put towards pavement preservation, and another $19 million for other projects. Airport improvements, including expansion of taxiways and cargo handling facilities, will account for $33 million. About $22 million for public buildings will primarily be invested in preservation and capital maintenance of existing City facilities. Improvements to preserve and rehabilitate the City's wastewater system will be funded with $16 million. Under the City's stormwater program, stream corridor acquisition, bank stabilization and stream restoration, and system upgrades and capacity enhancements are to be funded at $12.8 million. In January 2008, the Mayor and members of the Budget Committee reviewed the Multi-Year Financial Plan for FY09 to FY14. The Multi-Year Financial Plan (MYFP) is an annual compilation of significant but unfunded challenges and. opportunities that are likely to occur over the next six years. It serves as a strategic planning tool and helps address Council's goal for "Fair, Stable, and Adequate Resources." It provides an important means to improve the City's ability to link the Council goals process, the Capital Improvement Program, the General Fund Six-year Financial Forecast, other project or service specific strategic plans, and the annual budget process. A wide range of unfunded needs, challenges and opportunities, are included in the MYFP. The MYFP includes General Fund and other current service funding shortfalls, preservation and maintenance of existing City assets and facilities, and implementation of adopted plans or policies. The plan also identifies important emerging issues that may have a financial impact on the City. The FY09-14 MYFP identified a total of about $488 million in unfunded challenges and opportunities that may occur within the next six years. These include items with capital, operating, preservation and maintenance needs. The estimated unfunded costs by group are $52.8 million for General Fund shortfall and continuing current services, $118.3 million to preserve and maintain existing assets, $313.1 million to implement adopted plans and policies, and $3.4 million for improved or expanded services not part of the adopted plan. With the significant amount of future capital projects, as well as identified unfunded needs, the City also recognizes the need to be thoughtful and deliberate in planning future debt levels. As a result, the City has developed a Debt Affordability Study that is updated every two years in conjunction with the CIP update. This study looks at not just the legally allowable level of debt, but the level of debt that the community would consider to be affordable, given the ability of the community to pay for that debt. The Budget Committee adopted a debt policy limit of total outstanding debt of no more than 1 % of real market value of property. The Debt Affordability Study measures future debt plans against this debt policy limit to determine whether those plans are .considered affordable and those results are included in the CIP. As of June 30,2008, the City's net direct debt to real market value is 0.19%. 4