Capital Planning The (sort of) Definitive Guide (in some ways… possibly)

Capital Planning Budgeting Capital Equipment Planning Capital Improvement Planning Capital Maintenance Planning

Capital Planning Goals o outcomes Priorities o sense of urgency Costs o to do the thing o to NOT do the thing Timeframes Funding Sources o construction or acquisition o operation and maintenance o sustainability

Equipment Basic Rolling stock (cars, trucks, graders, loaders) Specialized Rolling Stock (mowers, sweepers, rollers, excavators, big sewer sucker-outer vacuums) Attachments and Accessories (cop cars, plow blades, tool boxes, electronic mounts, etc.) o often included with the value of the base piece of equipment Large Stand Alone Equipment (generators, air compressors, speed trailers) Set a minimum value or special category qualification standard o put it in a policy statement

Equipment How much stuff ya got? When d’ya gotta replace it? What’s it gonna cost to replace it? How ya gonna pay for it?

Equipment Useful Life Measurement o miles, hours, years, wag o what has been used o what is left Cost per Unit of Useful Life Measurement o cents per mile, cents/dollars per hour, dollars per year o calculate what has been used – (establish funding) o calculate how much remains to be funded o estimate budget basis and need Set It Aside o Capital Equipment Revolving Fund o Equipment Internal Service Fund

What is a Capital Improvement Plan? A tool to help identify and set goals. A tool to help identify, allocate and prioritize limited resources. A plan to help your City achieve your goals.

What is a Capital Improvement Plan? Infrastructure Assets o streets, bridges, curbs & gutter, sidewalks o water wells, towers, mains, treatment facilities o sewer treatment facilities, mains, lift stations o parks and recreational facilities o subdivision developments, redevelopments o major buildings and building improvements o economic development projects

What is a Capital Improvement Plan? Plan Component/Project Characteristics o use of the asset infrastructure o useful life of the improvement more than “X” years (suggestion: 10) o cost of the improvement more than $ “Y” (minimum range from $ 25,000 to $ 250,000) o source of funding maximizing uses of funding streams o complexity of the improvement

What is NOT a Capital Improvement Plan? What is NOT in a CIP? o vehicles and large equipment o computer and technology equipment o operational equipment or furnishings o items that should be funded from ongoing operations There are always exceptions. There are always situations unique to your community.

Who should be involved in the Plan? City Council City Clerk/Administrator/Manager Public Works Department City Engineer o On staff o Consultant Parks Department Finance Officer/Director/Treasurer Other Enterprise Funds who may have a stake

Why should we go to all this work? Legal requirements Responsible Financial Management o Best use of limited resources o Spread the burden of funding o Caring for the public assets General Public Safety Quality of Life in Your Community

How do we assemble a Capital Improvement Plan? Identify Projects Determine Cost Identify Funding Sources o What are they? o How much can they contribute? Prioritize projects …and then a miracle occurs…

Process What time period will the CIP cover? o 5 years at a minimum o 2015 – 2019

Process Street reconstructions w/Utility replacements o Obama Avenue o Boehner Boulevard o Schroeder Court Neighborhood o Gwynn Parkway Reconstruction Pavement mill and overlay projects o Landeen Road o Daniel Drive

Process Water tower repaint Park shelter in Kasmerczyk Park Baseball backstops at Bush League Field New Sidewalks connecting Public Buildings

Process What is each one of these projects going to cost? o Staff o Consulting Engineer o Financial Consultant Inflation Factors Market Factors Costs should be updated annually

Process Street Reconstructions o Assessments o Property Tax o MSA o Other Dedicated Sources Utility Replacements o Utility Funds Pavement Mill & Overlay o Property Tax o Other Dedicated Sources

Process Water Tower Repaint o Utility Funds Park Shelter and Baseball Backstops o Other Dedicated Funds o Property Tax Regular levy Voter Approved Levy New Sidewalks o Property Tax o Assessments o Other Dedicated Sources

Process Other Dedicated Sources o Franchise Fee o Enterprise Fund Transfers o Fund Appropriations o Windfall Receipts Bond Proceeds o Improvement Bonds require 5 year Capital Plan o Limit of 3 years to spend bond proceeds o Keep repayment period as short as possible (10 years) o Subject to Reverse Referendum o Identify Repayment Source

Process Financing Sources o How much funding can each sources provide? o How much are you willing to raise taxes, utility rates, assessments and other sources? o How much can you take from a source without interfering with fund operations?

Process Setting Priorities (not necessarily in order of importance) o mandates o potential liabilities o cost/benefit considerations o public opinion o system condition o provision of service o effect on other services There is no hard and fast system or formula for setting priorities. Sometimes you just have to make the best decision you can with the available information.

Process Things we didn’t talk about: o cash flow charting o reserve levels o bonds and advance funding o phasing of projects o inflation & market factors o rate adjustments Again, there are always things that are unique to your community.

Implementation Annual Budget Process o Include that year’s plans in the expenditures planned for the funds providing money to the project o Assure that utility rates will generate enough cash flow to do the projects (or to pay the debt issue to finance the project). o Ongoing work will include feasibility studies, plan approvals, bid specifications and bid approvals, payment authorizations and final project approval and closeout.

Maintenance Annual Review o Do we still have the same project priorities? o Update the costs, including scope of the project. o Are the cash flow projections on target? Are they higher than expected? Are they lower than expected? Celebrate Your Successes !!

It's just too much work! What might be the consequences of just not doing it or not doing it well? emergency expenses interruption of services sticker shock of having to do a project community understanding of where their money goes So, the advantages are… Control of expenditures Control of rates Consistency in planning Continuity of services Contentment in the City Council and Community

Questions…