Cost Accounting in Local Government

Is your infrastructure keeping up with Development?

O.K. so development demand is down, a lot! So what do you do? Plan!

Over the past ten years a fairly common lament of many of our Development Impact Fee clients has been that they just don’t have the time to plan for all development that was occurring. Most felt fairly overwhelmed by the rate of private development and the number of development applications they had to deal with on a daily basis. My advice? This is a great time to update all of your City’s strategic planning documents.

The typical annual governmental budget process is fairly short and does not allow time to deal with surprise capital needs. Admittedly the time limitations don’t always produce the best decisions either as decisions can nosedive down to the level of popularity contest. I recall a fire chief in one city surprising the budget staff with the need for a replacement fire station with a Awe need it now@ statement. Face it, no one likes to be surprised and it does not enhance your position for an approval. Budget staff need some kind of notice and some assistance as to how it could be financed. So here is a suggestion to avoid this problem. First recognize the need for good information and second, respect that need by acting over the next two years. No more capital needs surprises. You need to start your capital planning now.

Needless to say, the General Plan (and its many elements) is the spine of the capital planning process. One of the most important bits of information within this document is the land-use database. It tells you how much private sector development the agency’s current infrastructure serves (the de-facto Level of Service, or LOS) and how much more infrastructure will be required. The land-use database will let you know how many resident and business uses the City is currently serving. How many detached, attached, mobile home, senior housing and other dwelling units do you have? How many square feet of business uses (commercial, office and industrial) do you have now? How much commercial lodging do you have? Each of these land-uses has a demand generator different from the other land-uses. This information will allow the City to determine its existing Level of Service. If you don’t want to update the General Plan, you can at least update the land-use database.

The next step? How much of each land-use are you anticipating in the future? Once determined, you can plan your future infrastructure needs to be sure that you can accommodate the anticipated development envisioned by your updated General Plan land-use database. You can do this by updating your various Master Plans. But think beyond the typical comprehensive plans for Circulation, Storm Drainage, Water Distribution and Sewer Collection/Treatment systems. This time include a plan for fire suppression/medic facilities, law enforcement facilities, general employee facilities (city hall/city yard), public use facilities (community centers, etc.), aquatic centers and parkland acquisition and park facilities improvements. These documents should also include a component for the project identification and replacement of existing infrastructure. These replacement needs are often overlooked and, given the magnitude of accumulating capital replacement needs, should not be.

These valuable documents are great (and good reading) for all of us techies who somehow enjoy municipal capital planning, but tend to be far too detailed for most other people. This time go one step further and summarize it all in a Master Facilities Plan at General Plan build-out.

Simply stated, a Master Facilities Plan is a compilation, by infrastructure, of all capital projects required to serve the City’s residents and business owners at theoretical General Plan build-out, including replacements, upgrades and capacity increasing infrastructure. Each project looks like a basic Capital Improvement Project (CIP) information page, including a simple definition, justification, and cost estimate. Summarize the information by infrastructure category and for the entire city and you have a basic handbook for all future capital expenditure decisions. This then becomes the index for all future capital needs. They can be prioritized better once fully identified.

A Master Facilities Plan increases the likelihood of no capital needs surprises and will lead to better capital financing decisions. And now is the time to go through this process.

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