Cost Accounting in Local Government

Capital Infrastructure Defines Your Service Level

The Levels of Service (LOS) provided to the residents or businesses of any given City service is based upon (or limited by) the finite capacity of the infrastructure related to that service.  The design of any municipal project has a finite capacity, such as a four lane road segment, a 30” storm drainage pipe segment, or a 10,000 square foot library.  Each of those projects is designed to meet the needs of a defined and finite number of users.  A street segment can only handle so many vehicles per hour, especially at a speed that makes it worth using it for driving over longer distances.   A 30” diameter storm drainage pipe designed for a fifty year storm event simply cannot handle storm flows twice its capacity resulting from a one hundred year storm event.   A 10,000 square foot library has a finite space for the collection items and attendees and if the demand exceeds that finite space, users benefit is decreased.  A municipality with 0.40 square feet of library space and two collection items per resident will be able to serve more residents than a municipality with only a 0.10 square foot standard and one collection item per resident of library space.  Lack of sports park field space pits youth organizations against each other with demands for the limited practice and scheduled game space.  It’s as simple as that, and it applies to all infrastructures in the city.

The following is a more precise example using law enforcement services.

Consider the labor intensive service of law enforcement. Regardless of the quality and field capabilities of the City’s sworn police officers, the Department remains dependent upon its station’s square foot capacity.   A police station consisting of 7,500 square feet will sufficiently support roughly thirty sworn police officers at about 250 square feet per officer.   If the station size remains static at 7,500 square feet, but the sworn officer complement doubles to sixty police officers, the station, at 125 square foot per officer, will likely become a bit dysfunctional and affect the police service level.  The same holds true for police response vehicles and specialty equipment.   If a City adds thirty additional officers but cannot add station space, response vehicles and specialty equipment for them to use, the City has dealt with only half of the service provision equation.  In short, what they achieved by doubling the police force will not be maximized.  If you add thirty police officers but do not add a proportional amount of:

  • Police response vehicles, calls-for-services responses will likely not improve and the over-worked vehicles will need to be turned over more frequently.
  • Police station capacity, the calls-for-service responses may improve some but not proportionally.
  • Personal and specialty equipment, the calls-for-service responses could be dangerous, certainly for the police officers.

On the opposite side, if you add all of the above capital needs, but do not add additional sworn officers, the result would probably be limited to perhaps a minor improvement in response times but not necessarily in the quality.

Clearly, good municipal Levels of Service (LOS) require a balance of staff and service-providing infrastructure.  However, make no mistake about it, the capacity (the amount and the complexity) of any infrastructure defines, all or in part, that LOS.  This is the reason for the completion of Master Plans that we often see for circulation, storm drainage and any utility services your agency may provide.  Unfortunately, I rarely come across a Master Plan for any other service such as public safety or the Quality of Life infrastructures (libraries, parks, aquatics, community centers, open space, etc.).  However, mere identification of desired infrastructure is only half of the process, financing it is quite another matter.  We won’t even address the ability to maintain it over decades; that will be a separate topic.  Additionally, I have always found it curious that of the many required elements of a General Plan, a Financial Element is not one of them.

Finding additional capital revenues with the current severe limitations is highly improbable, making improvements in service level (LOS) via the increase in infrastructure capacity very difficult for the more established and fully developed agencies, especially those left with infrastructures based upon demand estimated in the 50’s and 60’s.

All of this makes a Development Impact Fee (DIF) schedule to provide for the one-time financing of any City’s infrastructure even that much more important for the agencies that have remaining vacant parcels available or are anticipating up-sizing of existing development.  For our detailed police services example, it will take a balance of infrastructure and annual recurring operational revenues to accommodate development with sufficient police responses within the desired (or at least the existing) LOS standard. It will take additional properly equipped officers, law enforcement station space, response vehicles and specialty equipment to accommodate the resulting calls-for-service anticipated from new development.

The importance of having a properly calculated and documented DIF schedule in order to merely accommodate development-related demands cannot be overstated.  The same concept holds true for the two labor-intensive public safety services and the infrastructure-intensive services such as circulation, storm drainage collection, potable and recycled water distribution, sewer collection and the Quality of Life infrastructure.  Of course, the DIFs can only be used for the capital acquisitions; the ongoing labor staffing costs will need to come from other recurring sources.

More information about Development Impact Fees.

 

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