capital planning the (sort of) definitive guide (in some ways… possibly)
TRANSCRIPT
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
• Prioritieso sense of urgency
• Costso to do the thingo to NOT do the thing
• Timeframes• Funding Sources
o construction or acquisitiono operation and maintenanceo 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 standardo 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?
Replacement Replacement Annual Tax Average Tax
Year Equipment Cost Levy Levy
2015 1999 Asphalt Roller 20,000
2015 2003 Crew Cab Pickup w/toolboxes 35,000
2015 2005 Toro 4100 Mower 72,000
2015 2012 Patrol Vehicle 32,000
2015 159,000 159,000 243,200
2016 1999 Ford Boom Truck 135,000
2016 2004 GMC 1-ton w/plow and dump box 35,000
2016 2002 Sterling L8500 Single axle w/box & plow 180,000
2016 2006 2740 J ohn Deere tractor 34,000
2016 2013 Patrol Vehicle 33,000
2016 417,000 417,000 243,200
2017 2005 4720 J ohn Deere tractor w/plow and mower 51,000
2017 2000 Elgin Pelican Sweeper 165,000
2017 2014 Patrol Vehicle 34,000
2017 250,000 250,000 243,200
2018 2008 Ford 4X4 F250 w/plow 32,000
2018 Atlas Copco Air Compressor 15,000
2018 2001 CAT excavator 67,000
2018 2015 Patrol Vehicle 35,000
2018 149,000 149,000 243,200
2019 2003 Sterling 7501 S/A w/dump, plow and wing 170,000
2019 2011 Chevrolet Crew Cab w/plow 35,000
2019 2016 Patrol Vehicle 36,000
2019 241,000 241,000 243,200
TOTAL 1,216,000 1,216,000 1,216,000
Equipment• Useful Life Measurement
o miles, hours, years, wago what has been usedo what is left
• Cost per Unit of Useful Life Measuremento cents per mile, cents/dollars per hour, dollars per yearo calculate what has been used – (establish funding)o calculate how much remains to be fundedo estimate budget basis and need
• Set It Asideo Capital Equipment Revolving Fundo Equipment Internal Service Fund
2015
Replacement Acquisition Acquisition Useful Replacement Existing Years to Annual
Year Equipment Year Cost Life Cost Reserve Replacement Replacement
2015 1999 Asphalt Roller 2001 18,000 15 20,000 20,000 1 -
2015 2003 Crew Cab Pickup w/toolboxes 2003 28,000 10 35,000 31,000 1 4,000
2015 2005 Toro 4100 Mower 2005 59,000 10 72,000 58,500 1 13,500
2015 2012 Patrol Vehicle 2012 30,000 3 32,000 32,000 1 -
2015 159,000 141,500 17,500
2016 1999 Ford Boom Truck 2000 120,000 20 135,000 106,000 2 14,500
2016 2004 GMC 1-ton w/plow and dump box 2005 32,000 10 35,000 31,000 2 2,000
2016 2002 Sterling L8500 Single axle w/box & plow 2003 87,000 15 180,000 134,000 2 23,000
2016 2006 2740 J ohn Deere tractor 2006 26,000 10 34,000 27,200 2 3,400
2016 2013 Patrol Vehicle 2013 31,000 3 33,000 11,400 2 10,800
2016 417,000 309,600 53,700
2017 2005 4720 J ohn Deere tractor w/plow and mower 2005 46,000 10 51,000 41,400 3 3,200
2017 2000 Elgin Pelican Sweeper 2000 93,600 20 165,000 108,000 3 19,000
2017 2014 Patrol Vehicle 2014 31,500 3 34,000 - 3 11,333
2017 250,000 149,400 33,533
2018 2008 Ford 4X4 F250 w/plow 2009 26,000 8 32,000 13,000 4 4,750
2018 Atlas Copco Air Compressor 2007 9,000 5 15,000 15,000 4 -
2018 2001 CAT excavator 2002 51,000 15 67,000 48,000 4 4,750
2018 2015 Patrol Vehicle 2015 32,000 3 35,000 - 4 8,750
2018 149,000 76,000 18,250
2019 2003 Sterling 7501 S/A w/dump, plow and wing 2003 117,000 15 170,000 140,100 5 5,980
2019 2011 Chevrolet Crew Cab w/plow 2011 29,000 10 35,000 14,800 5 4,040
2019 2016 Patrol Vehicle 2016 33,000 3 36,000 - 5 7,200
2019 241,000 154,900 17,220
TOTAL 1,216,000 831,400 140,203
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 Assetso streets, bridges, curbs & gutter, sidewalkso water wells, towers, mains, treatment facilitieso sewer treatment facilities, mains, lift stationso parks and recreational facilitieso subdivision developments, redevelopmentso major buildings and building improvementso economic development projects
What is a Capital Improvement Plan?
• Plan Component/Project Characteristicso use of the asset
• infrastructureo 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 streamso complexity of the improvement
What is NOT a Capital Improvement
Plan?
• What is NOT in a CIP?o vehicles and large equipmento computer and technology equipmento operational equipment or furnishingso 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 staffo 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 resourceso Spread the burden of fundingo 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 minimumo 2015 – 2019
Process• Street reconstructions w/Utility replacements
o Obama Avenueo Boehner Boulevardo Schroeder Court Neighborhoodo Gwynn Parkway Reconstruction
• Pavement mill and overlay projectso Landeen Roado 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 Staffo Consulting Engineero Financial Consultant
• Inflation Factors• Market Factors
• Costs should be updated annually
Process• Street Reconstructions
o Assessmentso Property Tax o MSAo Other Dedicated Sources
• Utility Replacementso Utility Funds
• Pavement Mill & Overlayo Property Taxo Other Dedicated Sources
Process• Water Tower Repaint
o Utility Funds
• Park Shelter and Baseball Backstopso Other Dedicated Fundso Property Tax
• Regular levy• Voter Approved Levy
• New Sidewalkso Property Taxo Assessmentso Other Dedicated Sources
Process• Other Dedicated Sources
o Franchise Feeo Enterprise Fund Transferso Fund Appropriationso Windfall Receipts
• Bond Proceedso Improvement Bonds require 5 year Capital Plano Limit of 3 years to spend bond proceedso Keep repayment period as short as possible (10 years)o Subject to Reverse Referendumo 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?
Capital Improvement Needs and Funding Sources
Streets Improvements Water Sewer Stormwater
Capital Capital Utility Utility Utility TOTAL
Obama Avenue 230,000 - 125,000 200,000 50,000 605,000
Boehner Boulevard 230,000 - 50,000 200,000 175,000 655,000
Schroeder Court Neighborhood 500,000 - 200,000 550,000 200,000 1,450,000
Gwynn Parkway Reconstruction 720,000 - 200,000 550,000 700,000 2,170,000
Landeen Road 300,000 - - - - 300,000
Daniel Drive 150,000 - - - - 150,000
2,130,000 - 575,000 1,500,000 1,125,000 5,330,000
Kasnerczyk Park Shelter - 150,000 - - - 150,000
Bush League Backstops - 50,000 - - - 50,000
- 200,000 - - - 200,000
Water Tower Repainting - - 80,000 - - 80,000
Public Sidewalk Initiative - 300,000 - - - 300,000
TOTAL FUNDING NEED 2,130,000 500,000 655,000 1,500,000 1,125,000 5,910,000
Annual Funding Available 450,000 100,000 150,000 300,000 250,000 1,250,000
Total Funding Available 2,250,000 500,000 750,000 1,500,000 1,250,000 6,250,000
Process• Setting Priorities (not necessarily in order of importance)
o mandateso potential liabilitieso cost/benefit considerationso public opiniono system conditiono provision of serviceo 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.
Capital Improvement Needs and Funding Sources
Streets Improvements Water Sewer Stormwater
Capital Capital Utility Utility Utility TOTAL
Obama Avenue 230,000 - 125,000 200,000 50,000 605,000
Plan for 2015 230,000 - 125,000 200,000 50,000 605,000
Boehner Boulevard 230,000 - 50,000 200,000 175,000 655,000
Bush League Backstops - 50,000 - - - 50,000
Kasmerczyk Park Shelter - 150,000 - - - 150,000
Plan for 2016 230,000 200,000 50,000 200,000 175,000 855,000
Schroeder Court Neighborhood 500,000 - 200,000 550,000 200,000 1,450,000
Plan for 2017 500,000 - 200,000 550,000 200,000 1,450,000
Water Tower Repainting - - 80,000 - - 80,000
Landeen Road 300,000 - - - - 300,000
Daniel Drive 150,000 - - - - 150,000
Plan for 2018 450,000 - 80,000 - - 530,000
Public Sidewalk Initiative - 300,000 - - - 300,000
Gwynn Parkway Reconstruction 720,000 - 200,000 550,000 700,000 2,170,000
Plan for 2019 720,000 300,000 200,000 550,000 700,000 2,470,000
TOTAL PLAN 2,130,000 500,000 655,000 1,500,000 1,125,000 5,910,000
TOTAL FUNDING AVAILABLE 2,250,000 500,000 750,000 1,500,000 1,250,000 6,250,000
Remainder for Extension of Plan 120,000 - 95,000 - 125,000 340,000
Process• Things we didn’t talk about:
o cash flow chartingo reserve levelso bonds and advance fundingo phasing of projectso inflation & market factorso rate adjustments
• Again, there are always things that are unique to your community.
City of Mosquito HeightsStreet Reconstruction Fund Cash Flows Analysis
Actual Budget Proposed Projected Projected Projected Projected2013 2014 2015 2016 2017 2018 2019
RevenuesFund Transfer -$ -$ -$ -$ -$ -$ -$ Franchise Fees 647,346$ 660,000$ 680,000$ 680,000$ 680,000$ 700,000$ 700,000$ Debt Service Levy -$ -$ 687,000$ 689,650$ 664,460$ 645,070$ 682,680$ Bond Proceeds (net) -$ 2,000,000$ -$ 2,000,000$ -$ 2,000,000$ -$ Misc. Operating 188,000$ -$ -$ -$ -$ -$ -$ Misc. Non-operating 2,123$ 2,189$ 5,519$ 3,333$ 5,816$ 3,368$ 5,802$ Total Revenues 837,469$ 2,662,189$ 1,372,519$ 3,372,983$ 1,350,276$ 3,348,438$ 1,388,482$
ExpendituresBond Principal -$ -$ -$ -$ -$ -$ -$ Debt Service -$ -$ -$ -$ -$ -$ -$ Bond Principal -$ -$ -$ -$ -$ -$ -$ Debt Service -$ -$ -$ -$ -$ -$ -$ Bond Principal -$ -$ 610,000$ 634,000$ 554,000$ 554,000$ 534,000$ Debt Service -$ -$ 77,000$ 55,650$ 110,460$ 91,070$ 148,680$ Total Expenditures -$ -$ 687,000$ 689,650$ 664,460$ 645,070$ 682,680$
Capital Outlay 152,002$ 1,330,000$ 1,560,000$ 1,690,000$ 1,665,000$ 1,730,000$ 2,570,000$ Total Cash Requirement 152,002$ 1,330,000$ 2,247,000$ 2,379,650$ 2,329,460$ 2,375,070$ 3,252,680$
Beginning Cash Balance 191,033$ 875,452$ 2,207,641$ 1,333,160$ 2,326,493$ 1,347,309$ 2,320,677$ Changes in Assets/Liabilities (1,048)$ -$ -$ -$ -$ -$ -$ Revenues* 837,469$ 2,662,189$ 1,372,519$ 3,372,983$ 1,350,276$ 3,348,438$ 1,388,482$ Expenditures (152,002)$ (1,330,000)$ (2,247,000)$ (2,379,650)$ (2,329,460)$ (2,375,070)$ (3,252,680)$ Depreciation Add-Back -$ -$ -$ -$ -$ -$ -$ Ending Cash Balance 875,452$ 2,207,641$ 1,333,160$ 2,326,493$ 1,347,309$ 2,320,677$ 456,479$
Bond Sale 2,200,000$ 2,200,000$ 2,200,000$
Assumptions:Cash basisAll assumptions are predicted on Cash Basis presentation.RevenuesYear 2010 and forward are predicted on a 3% increase in fees once every three years.ExpendituresCapital outlay is from the 2014 CIP
City of Mosquito HeightsStreet Reconstruction Fund Cash Flows Analysis
Actual Budget Proposed Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
RevenuesFund Transfer -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Franchise Fees 647,346$ 660,000$ 680,000$ 680,000$ 680,000$ 700,000$ 700,000$ 700,000$ 725,000$ 725,000$ 725,000$ 745,000$ 745,000$ 745,000$ 770,000$ 770,000$ 770,000$ Debt Service Levy -$ -$ 687,000$ 689,650$ 664,460$ 645,070$ 682,680$ 633,990$ 699,350$ 691,500$ 693,300$ 634,400$ 646,900$ 638,350$ 619,450$ 640,550$ 640,250$ Bond Proceeds (net) -$ 2,000,000$ -$ 2,000,000$ -$ 2,000,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Misc. Operating 188,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Misc. Non-operating 2,123$ 2,189$ 5,519$ 3,333$ 5,816$ 3,368$ 5,802$ 1,141$ (2,481)$ (6,450)$ (5,453)$ (4,229)$ (3,377)$ (4,361)$ (6,572)$ -$ -$ Total Revenues 837,469$ 2,662,189$ 1,372,519$ 3,372,983$ 1,350,276$ 3,348,438$ 1,388,482$ 1,335,131$ 1,421,869$ 1,410,050$ 1,412,847$ 1,375,171$ 1,388,523$ 1,378,989$ 1,382,878$ 1,410,550$ 1,410,250$
ExpendituresBond Principal -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Debt Service -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Bond Principal -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Debt Service -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Bond Principal -$ -$ 610,000$ 634,000$ 554,000$ 554,000$ 534,000$ 504,000$ 510,000$ 520,000$ 540,000$ 520,000$ 555,000$ 565,000$ -$ -$ Debt Service -$ -$ 77,000$ 55,650$ 110,460$ 91,070$ 148,680$ 129,990$ 189,350$ 171,500$ 153,300$ 134,400$ 116,900$ 98,350$ Total Expenditures -$ -$ 687,000$ 689,650$ 664,460$ 645,070$ 682,680$ 633,990$ 699,350$ 691,500$ 693,300$ 654,400$ 671,900$ 663,350$ -$ -$ -$
Capital Outlay 152,002$ 1,330,000$ 1,560,000$ 1,690,000$ 1,665,000$ 1,730,000$ 2,570,000$ 2,150,000$ 2,310,000$ 320,000$ 230,000$ 380,000$ 1,110,000$ 1,600,000$ 2,060,000$ 70,000$ 50,000$ Total Cash Requirement 152,002$ 1,330,000$ 2,247,000$ 2,379,650$ 2,329,460$ 2,375,070$ 3,252,680$ 2,783,990$ 3,009,350$ 1,011,500$ 923,300$ 1,034,400$ 1,781,900$ 2,263,350$ 2,060,000$ 70,000$ 50,000$
Beginning Cash Balance 191,033$ 875,452$ 2,207,641$ 1,333,160$ 2,326,493$ 1,347,309$ 2,320,677$ 456,479$ (992,380)$ (2,579,861)$ (2,181,311)$ (1,691,764)$ (1,350,993)$ (1,744,371)$ (2,628,732)$ (3,305,854)$ (1,965,304)$ Changes in Assets/Liabilities (1,048)$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Revenues* 837,469$ 2,662,189$ 1,372,519$ 3,372,983$ 1,350,276$ 3,348,438$ 1,388,482$ 1,335,131$ 1,421,869$ 1,410,050$ 1,412,847$ 1,375,171$ 1,388,523$ 1,378,989$ 1,382,878$ 1,410,550$ 1,410,250$ Expenditures (152,002)$ (1,330,000)$ (2,247,000)$ (2,379,650)$ (2,329,460)$ (2,375,070)$ (3,252,680)$ (2,783,990)$ (3,009,350)$ (1,011,500)$ (923,300)$ (1,034,400)$ (1,781,900)$ (2,263,350)$ (2,060,000)$ (70,000)$ (50,000)$ Depreciation Add-Back -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Ending Cash Balance 875,452$ 2,207,641$ 1,333,160$ 2,326,493$ 1,347,309$ 2,320,677$ 456,479$ (992,380)$ (2,579,861)$ (2,181,311)$ (1,691,764)$ (1,350,993)$ (1,744,371)$ (2,628,732)$ (3,305,854)$ (1,965,304)$ (605,054)$
Bond Sale 2,200,000$ 2,200,000$ 2,200,000$
Assumptions:Cash basisAll assumptions are predicted on Cash Basis presentation.RevenuesYear 2010 and forward are predicted on a 3% increase in fees once every three years.ExpendituresCapital outlay is from the 2014 CIP
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…