Presentation on theme: "Planning After PLANYC: A Framework for Developing New York Citys Next Ten-Year Capital Strategy 1 The Most Important Economic and Fiscal Decisions Facing."— Presentation transcript:
Planning After PLANYC: A Framework for Developing New York Citys Next Ten-Year Capital Strategy 1 The Most Important Economic and Fiscal Decisions Facing the Next Mayor A Citizens Budget Commission Conference December 6, 2013
Overview Legacy of the Bloomberg Administration Implications for What We do Next
Unprecedented Level of Capital Investment During the Bloomberg Administration 3 Note: Fiscal Year 2014 total commitments planned as of September 2013; all other years actuals.
70% of Capital Commitments for Education, Water & Sewer, Transportation, Parks & Culturals 4 Note: Fiscal Year 2014 total commitments planned as of September 2013.
Insufficient Funding for State of Good Repair Work 6
Contracting and Management Challenges Contributed to Delays and Cost Overruns Restrictive State laws – Construction contracts must be awarded to the lowest bidder; cannot let best value contracts – Pay and scheduling of workers dictated by prevailing wage laws – Wicks law mandates several subcontractors on building projects greater than $3 million Poor project scoping and management lead to costly change orders, which doubled in value and number since FY2006 7
Heavy Reliance on Debt to Fund Capital Spending; No Allocation of Resources from Operating Budget 8
Debt Burden Is High According to Metrics Used by Rating Agencies Debt Outstanding, FY2013Debt Service, FY2013 10 Note: Does not include debt of the New York City Municipal Water Finance Authority.
Improve Asset Management and Capital Planning Perform routine maintenance and regular replacement of assets to keep state of good repair backlog from growing Undertake a comprehensive needs assessment that includes all agencies and component units Use the needs assessment to develop a plan to achieve state of good repair Publish progress reports on SOGR goals and on major capital projects 11
Develop a Two-Pronged Investment Standard Develop an affordability standard for debt Develop criteria for paying some capital expenses from the operating budget; for example: – Regular replacement of vehicles and equipment; approximately $300 million a year, less than 1% of operating budget – Tied to annual depreciation expense – Tied to budget growth or surplus revenues 12
Use Clear Guidelines to Establish Priorities A portion of the plan will be for mandated projects, ongoing projects, and those backed by state/federal funds (e.g. resiliency and recovery efforts) Fix it first strategy: SOGR projects receive highest priority Second priority: Regular replacement of assets that ensures service levels are maintained or improved Finally: Expansion projects justified by rigorous cost-benefit analysis 13
Adopt More Cost-Effective Contract and Construction Management Better project scoping to improve design process and reduce change orders Renegotiate Project-Labor Agreements Pursue State legislation that: – Repeals Wicks Law – Expands contracting powers to include best value standards – Expands authority for design-build and public- private partnerships 14
Planning After PLANYC: A Framework for Developing New York Citys Next Ten-Year Capital Strategy 15 The Most Important Economic and Fiscal Decisions Facing the Next Mayor A Citizens Budget Commission Conference December 6, 2013