07-10-07 FPAC Agenda - Laserfiche WebLink

Home Browse Search

• The ongoing operating costs associated with each project should be quantified,and the sources of funding for 410 those costs should be identified • A clear estimate of all major components required to implement a project should be outlined,including land acquisition needs,design, construction,contingency and post-construction costs • Recognize the non-financial impacts of the project(e.g.,environmental)on the community Prioritize capital requests. Governments are continually faced with extensive capital needs and limited financial resources. Therefore,prioritizing capital project requests is a critical step in the capital plan preparation process. When evaluating project submittals, governments should: • Reflect the relationship of project submittals to financial and governing policies,plans,and studies • Allow submitting agencies to provide an initial prioritization • Incorporate input and participation from major stakeholders and the general public • Adhere to legal requirements and/or mandates • Anticipate the operating budget impacts resulting from capital projects • Apply analytical techniques,as appropriate, for evaluating potential projects(e.g.,net present value,pay back period,cost-benefit analysis,life cycle costing, cash flow modeling) • Re-evaluate capital projects approved in previous multi-year capital plans • Use a rating system to facilitate decision-making Develop financing strategies. GFOA recognizes the importance of establishing a viable financing approach for supporting the multi-year capital plan. Financing strategies should align with expected project requirements while sustaining the financial health of the organization. Governments undertaking a capital financing plan should: • Anticipate expected revenue and expenditure trends,including their relationship to multi-year financial plans • Prepare cash flow projections of the amount and timing of the capital financing • Continue compliance with all established financial policies • Recognize appropriate legal constraints • Consider and estimate funding amounts from all appropriate funding alternatives • Ensure reliability and stability of identified funding sources • Evaluate the affordability of the financing strategy,including the impact on debt ratios,taxpayers,ratepayers, and others References • A. John Vogt, Capital Budgeting and Finance:A Guide for Local Governments,(Washington,D.C.: International City/County Management Association,2004) • National Advisory Council on State and Local Budgeting,Recommended Budget Practices:A Framework for Improved State and Local Government Budgeting(Chicago: GFOA, 1998) • Patricia Tigue, Capital Improvement Programming:A Guide for Smaller Governments(Chicago: GFOA, 1996). • Nicole Westerman"Managing the Capital Planning Cycle: Best Practice Examples of Effective Capital Program Management," Government Finance Review 20,no. 3 (June 2004). • GFOA Recommended Practice:Establishing Appropriate Capitalization Thresholds for Tangible Capital Assets(2001) • GFOA Recommended Practice:Establishing the Useful Life of Capital Assets(2002) • GFOA Recommended Practice:Establishment of Strategic Plans(2005) Approved by the GFOA's Executive Board,February 24,2006. •