In 2017, De Soto's overall operating budget is just over $9.0 million dollars. This includes $4.3 million for the general fund, 1.9 Million for debt service, $490,000 for law enforcement $2.3 million for the water and sewer funds.
In order to maintain levels of service and keep the City in a health financial position, De Soto's 2017 budget includes a 4.8 Mil increase in the City's Mill Levy. This equates to an increase of about $12 per month for the average single-family residence. Sales taxes and franchise fees represent about 57% of total general fund revenues, while revenues from property taxes (mill levy) represent only about 27% of revenues. Modest declines in sales tax and franchise fee revenues resulted in the mill levy increase.
Economic activity within the City, new construction, and assessed valuations have continued the modest improvements we have seen since coming out of the Great Recession.
In 2016 a total of 1,052 building permits were issued, with a total construction value of just under $24 million dollars. This is up from 260 permits issued in 2015, but these numbers are inflated, in part, because of the ice storm that struck in May, which resulted in the replacement of 823 roofs in the City.
In 2016 the City issued 17 single-family residential building permits, which is up from 14 in 2015. We expect another increase in 2017. To encourage this trend, the City Council extended the Residential Permit Discount Program, which offers builders and developers a permit fee reduction. This program has been in effect since 2011, and has had a noticeable impact on new construction activity since that time.
2016 was a busy year for capital improvement projects in the City. A new 165-foot, 500,000 gallon water tower along K-10 was constructed. The water tower came at a cost of $1.0 million dollars; which was part of a total of $7.5 million dollar renovation plan for the City's water treatment and distribution facilities that began in 2010.
After careful study of the water fund, the City Council found it necessary to increase water service charges by 10% in 2016 in order to meet the debt obligations. The increased revenue generated by that rate adjustment, combined with lower expenditures the past two years, have made a significant improvement to the water fund cash balance, and no water rate increase was needed this year.
Another high-profile public project was the work that was done on the railroad crossing at Commerce Drive. The project raised the road profile of both Commerce Drive and the rail line to provide a smooth transition into the intersection, and included sidewalks on both sides of the reconstructed street. The construction costs total $410,000. The result is a vast aesthetic and functional improvement to the intersection, and a welcoming gateway to the community.
Several years ago, the Council put a priority on the preservation of the city-owned fire station building on 83rd Street downtown. A series of improvements to the structural and mechanical components to the building to preserve its long-term viability are underway. Past years' improvements include foundation repairs and sub-surface waterproofing, a new roof and HVAC equipment, and grading improvements. In 2016 the street department crews performed additional grading and paving replacements in the rear of the building, and we began a project to restore the brick facade on the south face.
The City's efforts to improve pedestrian access in the downtown area continued in 2016 with the replacement of five blocks of sidewalk along 83rd , 84th , and Delaware Streets at a cost of $91,000. This project was funded by a Community Development Block Grant, and was completed at no direct cost to the City. City staff has maintained inventory of sidewalk conditions throughout town, which serves as a basis for a yearly decision on replacements. We intend to continue our sidewalk improvement efforts in 2017 with the construction of a new walk along Ottawa Street from 84th Street to Lexington Avenue.
There is also exciting news to report on the economic development front. By far the most notable addition to our community in 2016 was HARP's 32,000 square foot grocery store on Commerce Drive. Beginning as early as 2014, City Staff, the Economic Development Council, and representatives from the City Council began meeting with representatives from HARP's to entice them to locate in our community. Those efforts resulted in an economic incentive package that included a Tax Increment Financing district to pay for site infrastructure, tax exempt status for construction materials, and the commitment by the City to repair the rail crossing on Commerce Drive. Throughout the process, we were able to build a lasting relationship HARP's, who has now become a very large part of our community in a very short time. All aspects of the project have exceeded expectations. From the quality of the facilities, to the friendly staff and store management, and their commitment to local organizations like the schools and the De Soto Food Pantry, HARP's has become the type of civic partner we hope to attract to our community. It is sure to serve as an anchor for the future development of the Commerce Drive corridor, and as an attraction for new businesses and residents throughout the community. I invite each of you to actively support our local grocery store by shopping there on a regular basis.
This spring will see the ground breaking on a $12 million dollar 122-unit apartment complex just around the corner from HARP's on Commerce drive. We have long identified a lack of rental apartment units in De Soto, and the developers believe that the new apartments will fill quickly, and will capitalize on demand from employees at our several manufacturing employers in the community including Huhtamaki, Rehrig Pacific, and Engineered Air. The addition of residents and traffic to the area is also sure to be a boost to retailers.
After more than eight years of dormancy, the Arbor Ridge subdivision is now under new ownership and is ready to move forward with new phases of the development. Arbor Ridge is a single-family development at the southeast corner of 83rd Street and Kill Creek Road. Originally approved in 2006 for 234 lots, the subdivision stalled in 2007 after an initial phase of only 43 lots. We're happy to have the project active again, and we?re looking forward to more home construction activity in the area.
This summer the Council negotiated a tax incentive package with MERCK Animal Health which could eventually result in tens of millions of dollars of new construction and expansion on their campus on 91st Street. Already Merck has begun construction on a new $8 million dollar testing laboratory, and they are now in the process of evaluating investments in new facilities to accommodate existing and future production. The De Soto site is being considered for an additional $80 million in the next 1 to 5 years, and approaching $100 Million in a 10-year time frame. MERCK currently employs 157 people at the De Soto campus with average salaries of about $85,000. The new expansions, if they occur, will add another 10 jobs to that total.
Looking forward to 2017, there is much work ahead of us. At the City Council meeting last week, we solidified our plans for the 2017 capital improvement efforts. This year's construction activities will include the reconstruction of 91st Street adjacent to the USD 232 campus west of Lexington Avenue with new curbs, crosswalks, and asphalt surface at an estimated cost of $380,000. We will continue improvements to the fire station exterior with the help of $60,000 in Community Development Block Grant funds, and we will spend $150,000 in general fund dollars for targeted street maintenance throughout the town. Improvements at the water treatment facility will continue with a rehabilitation of the raw water mains serving the plant, construction of a new distribution shop building, renovation of lab and office space, and architectural improvements to the treatment plant building.
We will also be tackling some administrative and policy issues this year including updates to our Comprehensive Plan, a facility masterplan for the use and ultimate renovation of City Hall, new and enhanced newsletter and digital communications efforts, the completion of our Council Strategic Plan effort, and a feasibility study for a new Public Works facility.
I am excited to continue the progress we've made as a community and welcome the opportunities ahead.
Thank you for giving me the opportunity to present this information on the state of the City of De Soto, as you can see, the City is in great shape and I believe we are in a position in 2017 for even greater things!
Friday, April 28
De Soto Chamber of Commerce Golf Outing & Networking