07-10-07 FPAC Agenda - Laserfiche WebLink

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• RECOMMENDED PRACTICE Multi-Year Capital Planning(2006) (CEDCP) Background. Buildings,infrastructure,technology,and major equipment are the physical foundation for providing services to constituents. The procurement,construction,and maintenance of capital assets are a critical activity of state and local governments, school districts,and other government agencies,and therefore require careful planning. Capital planning is critical to water,sewer,transportation,sanitation,and other essential public services. It is also an important component of a community's economic development program and strategic plan. Capital facilities and infrastructure are important legacies that serve current and future generations. It is extremely difficult for governments to address the current and long-term needs of their constituents without a sound multi-year capital plan that clearly identifies capital and major equipment needs,maintenance requirements,funding options,and operating budget impacts. A properly prepared capital plan is essential to the future financial health of an organization and continued delivery of services to citizens and businesses. Recommendation. The Government Finance Officers Association(GFOA)recommends that state and local • governments prepare and adopt comprehensive multi-year capital plans to ensure effective management of capital assets. A prudent multi-year capital plan identifies and prioritizes expected needs based on a community's strategic plan,establishes project scope and cost,details estimated amounts of funding from various sources,and projects future operating and maintenance costs. A capital plan should cover a period of at least three years, preferably five or more. Identify needs. The first step in capital planning is identifying needs. Using information,including development projections, strategic plans,comprehensive plans, facility master plans,regional plans,and citizen input processes,governments should identify present and future service needs that require capital infrastructure or equipment. In this process,attention should be given to: • Capital assets that require repair,maintenance, or replacement that,if not addressed,will result in higher costs in future years • Infrastructure improvements needed to support new development or redevelopment • Projects with revenue-generating potential • Improvements that support economic development • Changes in policy or community needs Determine costs. The full extent of project costs should be determined when developing the multi-year capital plan. Cost issues to consider include the following: • The scope and timing of a planned project should be well defined in the early stages of the planning process • Agencies should identify and use the most appropriate approaches,including outside assistance,when estimating project costs and potential revenues • For projects programmed beyond the first year of the plan,governments should adjust cost projections based • on anticipated inflation