Capital Planning in Arlington...B. Rehrig Timur Yontar Community Safety Capital Planning Committee...
Transcript of Capital Planning in Arlington...B. Rehrig Timur Yontar Community Safety Capital Planning Committee...
Capital Planning October 17, 2015
ATFC 2015 Page 1
Capital Planning in Arlington: A 30 Year Learning Process and S8ll Evolving
Associa'onofTownFinanceCommi1eesCharlesFoske1
October21,2017
Agenda
• MembershipandOrganiza'on• CapitalPlanningObjec'ves• Ground-upCapitalPlanning• CapitalPlanningandAnnualBudgets• FinancingStrategies• ManagingDebt.PlanningAhead• The5%Rule• GePngBuy-inAcrossCons'tuencies
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Capital Planning Commi=ee
InArlington…• CPCadvisesTownManager,FinComandTownMee'ng• CPCmembersrepresent:
• FinCom• Treasurer• SchoolDepartment• TownManager• Comptroller• TownMee'ngandCi'zens
• TheCPCusesarollingfive-yearplan,thefirstyearofwhichisthecapitalbudget
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Commi=ee Membership
• BrianRehrig–Ci'zenAppointee,ViceChair
• DeanCarman–Treasurer• JohnDanizio-SchoolDepartmentDesignee
• SteveAndrew-Ci'zenAppointee,Secretary
• CharlieFoske1-FinanceCommi1eeDesignee,Chair
• SandyPooler-TownManagerDesignee
• ChrisMoore-Ci'zenAppointee• RichardViscay-Comptroller• BarbaraThornton-Ci'zenAppointee• AmyFidalgo–ManagementAnalyst• TimurYontar-Ci'zenAdvisor• JoeBarr–Ci'zenAdvisor
• ManytownsdonotincludeTownstaffmembersintheircapitalcommi1ee
• Arlingtonconsidersstaffmembershipcri'caltocapitalplanningsuccess:
• Townstaffersknowhowthingsreallywork
• HavingTownandSchoolatthetableinsuresahighdegreeofcoopera'on
• Havingtown/schoolmanagementandfinancialprofessionalsinvolvedintheprocessgivesdepartmentmanagerscomfortthattheyaregePngafairhearing
• Havingstrongci'zen,TownMee'ngMemberandFinCompar'cipa'ongivesTownMee'ngcomfortthattaxpayersmoneybeingallocatedforbigexpendituresisgivenclosescru'nyandcarefulplanning
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Arlington CPC Organiza8on 2017-2018
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Capital Planning Committee Organization
HighwayEngineeringW&S Enterprise FundsCemeteryNatural ResourcesBurns Rink Ent. FundParks & Playgrounds
Dean CarmanChris Moore
Joe BarrPublic Works & Recreation
Town ManagerEducationSelectmenLibraryLegalFacilitiesPurchasingIT
B. ThorntonR. Viscay
Adminstration
TreasurerComptrollerCOA Ent. FundsHuman ServicesPlanning & Development
S. PoolerC. FoskettS. Andrew
Finance
C.S. PoliceC.S. FireInspectional Services
J. Danizio,B. Rehrig
Timur YontarCommunity Safety
Capital Planning Committee
• As Arlington’s Management Analyst, Amy Fidalgo provides coordination and support from the Town Manager’s office.
• Subcommittees are organized so that Town staffers do not review their own departments, rather they have to pass muster from other managers
• Members stay with subcommittees for multiple years, gaining subject matter expertise and providing institutional memory for the whole Committee
• Advisors are selected as part of a planned committee expansion in 2018
Why Capital Planning?
• MosttownbudgetsareprimarilylimitedbyProp2½• Rarelywillbudgetgrowth,eveninhighgrowthtowns,supportlargejumpsinexpenditures
• Taxpayers,Selectmen,otherElectedOfficialsandTownMee'ngsdon’tlikefinancialsurprises
• Largecapitalexpendituresforinfrastructureandequipmentareodennotsupportableinasinglebudgetyear
• Failuretomaintaininfrastructureandcapitalassetscanresultinreducedservices,ci'zenanxietyandeveninjuryordeathtoTownworkersorthepublic
• Employeesdeliverservices,butthedeliveryplaeormsarethetools,equipmentandinfrastructureofthecapitalbasefromwhichgovernmentworks
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Planning
• ThelateandreveredYogiBerra:“It'stoughtomakepredic'ons,especiallyaboutthefuture.”
• “…aboutthefuture”:• Whatisitwewillneed?• Whenwillweneedit?• Wherewillwegetthefundstopayforit?• Whowillmanageitsuse?• Whowillmaintainit?
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Capital Planning
• CapitalPlanningsetsandmeetslong-rangeexpecta'onsforcurrentandfuturecapitalexpenditures.
• CapitalPlanningsetsandmeetsexpecta'onsforTownexecu'vesandmanagement,theFinanceCommi1ee,TownMee'ngandci'zens.
• SuccessfulCapitalPlanningreducesoreliminatesuncertaintyintheacquisi'onofcapitalassets.
• SuccessfulCapitalPlanningfacilitatespostponingsomecapitalexpendituresinfavorofothersaspartoftheplanningprocess.(AbrahamMaslow,“PsychologyofBeing”,1970:Delayedgra'fica'on)
• SuccessfulCapitalPlanninggivesTownMee'ngandvoterscomfortwhilespendinglargesumsoftaxpayersmoney.
• SuccessfulCapitalPlanninghelpsimprovetheTown’sbondra'ng• Chooseagooddatabasetooltomaintainrecord
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Some Comments on Process
• TheTownManagernormallyownstheCapitalBudget• TMmanagespurchasing,implementa'on,maintenance,anddepartments.Some'mestheSchoolSuperintendentassumesspecificownership
• Departmentheadsrequestcapitalpurchasesorassets,becausesomebodyhastohavecustody,careandcontroloftheassetoveritslife
• Privateorganiza'onsorci'zensdonotrequestcapitalassets• ACapitalPlanningCommi1eereviewsrecommenda'onsandrequests,arbitratesandrecommendsabudgetandplantotheFinanceCommi1eeandTownMee'ng
• TownMee'ngapprovesaCapitalBudgetandPlan
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The Process
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Department Five Year Requests - August
July 1 Funding
Department Expenditures Throughout Fiscal year
Spring Town Meeting Town Meeting Approves Next FY Budget
Town Manager and FinCom
Capital Planning Committee: One Year Budget, Five year Plan
Capital Planning Committee Review September to January
Monitor Prior Expenditures
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Pre-1986 A 8me of Change and Endless Debate
• Pre1986• Selectrictypewritervs.laddertruck• Endlessdebates• Hugesurprises• Wideswings• Li1leintra-departmentcoordina'on
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$500 - $800 in early 1970’s, $2,000 to $3,000 in today’s currency Every desk had a typewriter. With memory (2,000-$5,000 then)
1985 Pierce-Arrow Ladder 1985 ~ $250,000
30 Years of Capital Budge8ng
2006• MSAccessDataBase• Debtforecas'ngworking• MSBAtakesover• Exempt&Non-exempt• Commi1eeexpands
2011• Newgenera'onmembership
• Transi'oninTownManagement
• Morefocusondebtmanagementandforecas'ng,AAAra'ng
2016• Paperlessdataentry• Comprehensivedebtschedules
• CloserintegraDonwithTownManagement
• CommiEeeexpansion?
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1986• TypedPlan• Li1lePlanning• TownManagerResistance
1991• TownManagerEnthusias'c• Excelspreadsheet• Debtmanagementanissue• NoSchoolsupport
1996• “BondLimitModel”• Schoolss'llresis'ng• FiveyearhorizonworkingforTown• Firealarmsurprise
2001• Elementaryschoolrebuild• Debtexclusions• SchoolsonBoard• Excelnotadequate• RomneyandSBAB
“Founders” of Modern Capital Planning Process: • Town Treasurer: John Bilafer • FinCom Member: Murdena Campbell
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Cloud Capital Planning From the Ground Up
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• Department managers input requests into cloud-based form • Committee members access, review, comment and recommend on
electronic form
Some Financial Strategies
• Non-exemptbudgetonly(TMapprovalonly):• Allcash–useannualreservesetasides(toughtodo),butsavesoninterest• Cashandborrowing–flexiblewaytomeetneedson'melybasis
• Exemptbudgetonly(requirespublicreferenda)• Canbecashordebtexclusionoroverride
• Combina'onofnon-exemptandexemptbudge'ng• Usenon-exemptplanformostprojects• Usenon-exemptplanforextraordinaryexpenses• Arlingtonfollowsthisapproach
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Sources of Funds
• CurrentFYnon-exemptbudgetdirectappropria'on(“Cash”).• CurrentFYnon-exemptbondedappropria'on(“Bonds”).• Grants,CDBG,Trusts,enterprisefunds,otheroff-balancesheetincome(“Other”).
• Proposi'on2½exemptborrowing.• CommunityPreserva'onAct–newinArlington(“CPA”)
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Uses of Funds
• Purchaseofqualifyingequipment,material,buildingsandotherassets.
• Interestonbondsorbondan'cipa'onnotes(BANS).• Principalonbonds(principalandinterestonbondstogethercalled“debtservice”.)
• Dis'nguishbetweenexemptandnon-exemptdebtservice.
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Non-exempt Capital Spending Policy
• Setasidedebtexclusionsfornowasextraordinarysitua'ons.• Howdoweplanaggregatespendingfromournon-exemptbudget?
• Levelfund• Baseondetailedannualrequirements• Plantoaconstantpercentageofnon-exemptbudget
• Arlingtonuses5%• Otherpossibili'es…
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Defining the Capital Budget
• Note:Bondsusuallyhaveinterestonlyorsmallprincipaleffectincurrentyear.
• TotalcapitalbudgetforFYissumof:• DirectcashexpendituresforcapitalitemsinFY,and• InterestandprincipalimpactinFYofnewbonds,ifany,and• Debtserviceonallpriorbondedexpenditures.
• OneplanningapproachfixesthissumasapercentageoftheannualTownBudget.
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Capital Budget = Cash Purchases + New Debt Service + Prior Debt Service
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FY 2018 Capital Spending in Arlington
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Plan Format 2018 2019 2020 2021 2022 GrandTotal
COMMUNITYSAFETY-FIRESERVICES $900,000 $95,000 $150,000 $335,000 $805,000 $2,285,000EQUIPMENTREPLACEMENT $30,000 $40,000 $150,000 $75,000 $75,000 $370,000ExerciseEquipment&Furniture-Cardio $40,000 $40,000JawsofLife-ExtricationEquipment $50,000 $50,000ReplaceFirefighterProtectiveGear $25,000 $25,000 $50,000ReplaceThermalImagingCameras $50,000 $50,000ReplacementofPortableRadios $150,000 $150,000RescueBoat,Motor&Trailor $30,000 $30,000
GrandTotal $13,533,428 $11,073,309 $21,042,701 $7,892,035 $8,008,544 $61,550,017FundingSourcesIncludingCPARowLabels 2018 2019 2020 2021 2022 GrandTotalBOND $5,520,000 $4,940,000 $14,891,000 $2,099,000 $1,670,000 $29,120,000CASH $4,441,928 $2,518,309 $2,539,701 $2,206,035 $2,700,544 $14,406,517OTHER $3,571,500 $3,615,000 $3,612,000 $3,587,000 $3,638,000 $18,023,500CPA $1,526,033 $500,000 $907,700 $407,700 $475,000 $3,816,433GrandTotal $15,059,461 $11,573,309 $21,950,401 $8,299,735 $8,483,544 $65,366,450October 21, 2017 ATFC - Capital Planning Workshop 20
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Calculate the Tax Impact
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Compare to Budget
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Planning the Future
• Calculateyear’sforecastbudget• Adjustforexemptdebt,re-imbursements• Calculate5%fortotalcapitalanddebtservice=capitalbudget• Addineachyear’snewplanneddebtservicetoknownnon-exemptdebtservicenowandinfuture
• Addindirectcashexpendituresasplanned• Comparetobudget
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New Access Bond Data Base and Pivot Tables
• Thisatruncatedsample• EveryfeatureofeverybondiscapturedinMSAccess,Type,interest,term,payments,exempt/non-exempt,insideoroutsidelimit,etc.
• Updatedwithnewborrowingyearly
• Permitsstraigheorward,accurateforecastsoffuturedebtservicebasedonAuthorizedandissuedbonds
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Kudos to: Deputy Treasurer Michael Morse CPC Vice-chair Brian Rehrig
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Forecas8ng New Debt Service FUNDINGSOURCE (All)Department Item Life FiscalYear
2018 2019 2020 2021 2022 GrandTotalBOARDOFSELECTMEN VotingMachines 10 $1,925 $14,850 $14,465 $31,240BOARDOFSELECTMENTotal $1,925 $14,850 $14,465 $31,240COMMUNITYSAFETY-FIRESERVICES PurchaseEnginePumpertoReplace#1006 20 $12,000 $12,000
PurchaseNewEngine-Pump-Replace#1007 20 $10,063 $48,875 $47,869 $46,863 $45,856 $199,525ReplacementofPortableRadios 7 $2,625 $26,679 $25,929 $55,232Rescue-Ambulance2008FordOsage 5 $4,200 $56,400 $54,720 $53,040 $51,360 $219,720Rescue-Ambulance2013FordHorton 5 $4,550 $61,100 $65,650
COMMUNITYSAFETY-FIRESERVICESTotal $14,263 $105,275 $105,214 $131,131 $196,245 $552,127COMMUNITYSAFETY-POLICESERVICES RadioUpgrade-ReplacementProgram 7 $14,998 $152,424 $148,139 $315,560COMMUNITYSAFETY-POLICESERVICESTotal $14,998 $152,424 $148,139 $315,560FACILITIES TownHall-Renovations 20 $1,750 $10,250 $18,575 $26,725 $34,950 $92,250FACILITIESTotal $1,750 $10,250 $18,575 $26,725 $34,950 $92,250SCHOOLS Bus#102-53passengerbus 5 $1,663 $22,325 $21,660 $45,648
Bus#103-77passengerbus 5 $2,275 $30,550 $29,640 $28,730 $91,195Bus#107-53passengerbus 5 $1,925 $25,850 $25,080 $24,310 $77,165Bus#108-53passenger 5 $2,000 $2,000ConverttoScienceClassroomsDallin&Brackett 20 $4,375 $21,250 $25,625Dallin-Chiller 20 $4,375 $21,250 $20,813 $20,375 $66,813FoodServicesTruck 15 $963 $5,592 $5,463 $5,335 $17,353GibbsSchoolRenovation 20 $8,750 $42,500 $41,625 $40,750 $39,875 $173,500HardySchoolExpansion 20 $61,250 $297,500 $291,375 $285,250 $279,125 $1,214,500LandscapeImprovements-BishopSchool 15 $2,188 $12,708 $12,417 $27,313WaterPenetrationBishop 20 $5,250 $25,500 $30,750
SCHOOLSTotal $70,000 $349,538 $420,092 $451,654 $480,577 $1,771,860GrandTotal $89,600 $581,543 $1,347,776 $2,597,433 $2,879,392 $7,495,744
Bond Anticipation Notes Interest $4,000 $4,000TotalBondandBanNon-ExemptFutureDebtService $89,600 $585,543 $1,347,776 $2,597,433 $2,879,392 $7,499,744
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Note: List is truncated
Forecast of Non-exempt Debt
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Es8mated Total Debt Balances
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Arlington and Debt Limit
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Winning Town Mee8ng Support for the Capital Budget
• HaveaCapitalPlanaswellasabudget.• Wheneverpossibles'cktotheplan.• BringbadnewstoTMassoonaspossible,preferablyyearsinadvance.• Alwayshighlightproblems,don’tglossthemover,explainthemindetail.• GiveTMcreditforCapitalSpendingwithintheplan,whichthenbecomesTM’splan.
• GiveTMcreditforspendinglargeamountsofmoneywisely;that’susuallywhattheywanttodo,butrarelycanbesuretheyhave.ACapitalPlanandhistoryallowsmeasurementandproof.
Result:31yearssuccessfulTMvoteswithnochanges,mostvotesunanimous.
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Capital Planning Commi=ee Role
• Setstandardsandpriori'es.• Providecon'nuityandins'tu'onalmemoryovermanyyears.
• Inspireandcajolemanagerstoplanahead.• Rewardcarefulplanningbymanagementwithfunding-someday.
• Communicateshort-termandlong-termneedstoTownManager,FinanceCommi1ee,TownMee'ngandCi'zens.
• ExhibitpredictabilityandGravitas.
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Past Present and Future
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Arlington non-exempt capital spending viewed by Program as of June 2017:
Major Building Projects Over 30 Years
Non-Exempt• O1osonMiddleSchool(rnv)• RobbinsLibrary(withgrants)(rnv+new)
• ParkCircleFireSta'on(new)• HighlandFireSta'on(rnv)• CommunitySafetyBuilding(rnvcomplete)
• CentralFireSta'on(rnvComplete)• Stra1onE.S.(rnvinprocess,par'allyexempt)
• HardyExpansion(inprocess)
Exempt• Bracke1E.S.(new)• HardyE.S.(rnv)• BishopE.S.(rnv)• PeirceE.S.(new)• DallinE.S.(new)• ThompsonE.S.(new)• ArlingtonH.S.(rnvinplanning)• MinutemanRegionalV.H.S.(inprocess)• GibbsM.S.(inprocess,par'allynon-exempt)
• Thompsonexpansion(complete)
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New Challenges for Arlington
• Respondtoapparentincreaseinstudentpopula'ongrowth=onenewelementaryschool
• ExpandThompsonElementarySchool• ExpandHardyElementarySchool• BringformerGibbsMiddleSchoolbackonline
• RebuildArlingtonhighSchool
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Email: [email protected]
Charlie Foskett 101 Brantwood Road Arlington, MA 02476-8005 Tel: +1-(781)-646-5882 Mobile: +1-(781)-492-0800 Fax: +1-(781)-641-4769 Email: [email protected]
You can download a copy of this presentation and the Arlington Capital Report for FY2018 from the internet http://www.foskettco.com/ATFC2017