REAL Capital Investment Planning

Planning grounded firmly in reality.

The typical Capital Investment Plan (sometimes called a Capital Improvement Plan) is simply a five-year 'wish list' of projects a community hopes to do. "We'd like to pave this road, fix this pipe, build this building, etc."

The most "advanced" of these plans attempts to tie each project to a revenue stream, identifying how it is to be paid for (assessment, general fund, new debt, grant application, etc.)

But this standard approach still leaves many critical questions unanswered:

• How much public infrastructure do we have? What condition is it in? When will it need to be maintained or improved? What is the estimated cost?
• Do we have the resources to maintain our existing public infrastructure over the long term? What are the funding sources? Are they reliable?
• Where are the parts of our system that generate a high rate of return (generate more revenue than they cost to maintain)? Where are the parts that have a low rate of return (cost more to maintain than they generate in revenue)?
• Are there strategies to improve our rate of return?

Focusing on the current wish list may be easier and more rewarding in the near-term for everyone involved, but without a full understanding of the public’s balance sheet, this traditional approach is putting Rural America into a deep financial hole. Meanwhile, small towns are being crushed by the financial burden of infrastructure maintenance. This is not from a lack of money but a lack of a long-term focus.

The standard approach does not answer the critical questions. The result is that we overbuild, committing to more infrastructure than we can afford to maintain, and in places that fail to benefit the community in the long run.

Are you ready to get REAL with capital investment planning?