If Dunwoody wants to keep building new parks and other projects, it has to drum up more money to pay for maintenance, says the city’s finance director, who is warning of reaching a “crossroad” on spending.
In a recent memo to the City Council, Finance Director Chris Pike said the city is currently able to operations budget items, such as park maintenance. But as the city eyes new projects in the future, the money is currently not there to cover all costs.
“I feel our existing capital investments have reach[ed] a point where the maintenance of which consumes virtually all of our budgeted resources,” Pike wrote in an Aug. 13 memo.
“I routinely hear great ideas of how to improve our parks, improve our streets and infrastructure, provide new and more services, and better protect our city,” he stated. “The result of this increase in scope and discussions of more increases place us at a crossroad.”
Pike delivered the news as the city plans spending for next year. The 2019 budget process is now underway with department heads and staff and then heads to the Budget Committee in mid-September.
“We’re at a unique crossroads in our city’s history,” Pike said in an interview, reiterating the theme of his memo. “The goal is for the mayor and council to start thinking when they build something, ‘How will we take care of it?’”
Dunwoody, with a population of nearly 49,000, is a traditionally fiscally conservative city. The past two years its annual budget came in at $24 million . Neighboring Brookhaven, with a population of just over 52,000, approved a 2018 budget totaling nearly $41 million
Pike praised the mayor and council for their fiscal responsibility over the years. He noted the city continues to undertake capital projects such as paving and sidewalks, but those kinds of projects typically do not need much from the city’s operations budget.
The recent purchase of the new City Hall for more than $8 million means more money is needed to clean and maintain the building – costs the city didn’t have to worry about when it was renting its previous space, Pike explained.
City Hall was purchased through a $9.9 million loan and nearly $3 million in surplus funds. City staff moved into the new building in January.
The city does not break out maintenance costs specifically by location or facility but are covered in general departmental amounts. City Hall falls under Finance & Administration and in 2018 the city budgeted $186,000 for repairs and maintenance for all of its facilities.
In 2018, the city budgeted $2.3 million for its Parks and Recreation Department with nearly $1.4 million dedicated to repairs and maintenance of all parks.
The mayor and council now face spending more than $7 million to renovate Brook Run Park, including adding a band shell in the Great Lawn and building two multi-use fields at the park. Not only are there costs associated with maintaining these new capital projects, there is money needed to staff and plan the programming at these fields.
The city also recently built two new baseball fields for Dunwoody Senior Baseball for more than $7 million and Pernoshal Park was completed a couple years ago. Construction costs for these projects were paid out of the city’s capital budget, but money to maintain them is tight, Pike said.
“We’ve crossed over into a different world,” Pike said. “Where are we going to find revenues to take care of operations? That’s the question.”
In the memo, Pike explained the city’s dilemma like this: “What capital investments exist in our future? What services do we wish to provide in the future? How will we finance the capital improvements?
“Also, and just as important, what operating revenues (i.e. increases in operating revenues) are at hand to maintain these increases in capital and operating requirements? It would be unwise and impractical to continue on pace with capital projects without knowing how we will maintain them in the years to come,” Pike added.
Councilmember John Heneghan sits on the Budget Committee and said there needs to be a “happy medium” in providing more programs that mean more costs.
“There is no infinite amount of money,” Heneghan said. “We’ve been focused on parks and paving and now we’ve started moving into programming and that’s more expensive.”
The city is financially sound and has a four-month reserve saved up, Pike said. The city can look at cutting back on capital expenses or find ways to increase revenue.
He pointed to Brookhaven’s decision there to put a $40 million parks bond referendum on the November ballot.
And like Brookhaven, Dunwoody also recently raised its hotel-motel tax to use for trails and parks to attract tourism, but also for use by local residents.
Brookhaven recently issued $15 million in revenue bonds backed by the anticipated hotel-motel tax funds to pay for construction of the Peachtree Creek Greenway, a linear park and multiuse trail.
Dunwoody could also issue revenue bonds on its projected revenue from hotel-motel tax money to quickly build planned green space and trails in Perimeter Center that have been sitting on shelves for years. The city expects to bring in $850,000 a year with the new hotel-motel tax money.
Mayor Denis Shortal said he is willing to look at issuing bonds backed by the city’s hotel-motel tax money. But bonds for anything else, he doesn’t support.
“Bonds just put you in debt,” he said. “I’m not a bond person. I’m not a debt person. It’s going to be ‘pay me now or pay me later’ when you use bonds.”
As for Pike’s warning that the city is now at a crossroads, Shortal said he agreed.
“We are still in the black, we can do all the things we want to do,” he said.
But this year’s $1.85 million for the new intersection on Roberts Drive for use by the new Austin Elementary School and also the Dunwoody Nature Center was an unexpected hit to the pocketbook, Shortal said.
“There isn’t a lot of surplus. We’ve never had a big surplus,” he said.
“We don’t have big budgets like everyone else.”