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Systematic financial planning
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Financing options for …

Or recover expenses related to labor, travel time, and vehicles by charging full cost or closer to full cost for special services. Many departments charge only a fraction of the fully loaded cost for turning service on and off. Conduct cost-of-service studies and create new dedicated fees or adjust the fees for special services accordingly.

Or step up billing and collection efforts. Though it requires an up-front investment, technologies such as automatic meter reading ultimately improve financial performance by more accurately tracking water and energy use, getting bills out to customers more quickly, and enabling billing disputes to be quickly resolved.

Some jurisdictions are changing policy to more aggressively use collection powers to encourage timely payment of tax bills and user fees.

Enhanced tracking of projected vs. actual revenues. Given changing usage patterns by both residential and business customers, revenues from both taxes and user fees are unpredictable at best.

For example, a transit agency that depends to a significant extent on toll revenues to support its capital and/or operating budgets may find that projected revenues are less certain than in previous years because of declines in traffic.

Implementing more frequent updates to revenue tracking is important to maintain sufficient reserves and working capital. Also, more detailed customer tracking — such as surveys to more precisely identify what percentage of toll system users are commuters going to and from work vs. tourists vs. non-commuting local riders — may be warranted.

Learning from peers and industry research such as the analysis of effective utility management recently completed by the EPA, several water industry associations, and a number of utilities.

The products of this collaboration include a primer that identifies financial viability as one of 10 critical aspects for a sustainable utility, and identifies key elements of financial viability, such as understanding of full life-cycle costs.

The primer, as well as a case study book and related working papers and reference documents, are available at http://watereum.org.

Next month: A utility lightens the load on city's general fund by creating a dedicated stormwater management fee.

— Matichich (michael.matichich@ch2m.com) is global technology leader, Financial Services, for engineering firm CH2M Hill.

Plan now to borrow (or raise rates) later

Depending on access to, and the reliability of, funding sources as well as equity to stakeholders and customers, each phase of a capital project or program may require more than one source of funds.

Some phases require combinations of sources. The check marks below show one potential strategy for financing a project's entire life cycle. For example, under the “implementation” column, funds for construction might come from the American Recovery and Reinvestment Act of 2009, long-term borrowing, and other sources of revenue, particularly if the project is to be built in stages.

Develop several strategies that span inception through operation. The advantages and disadvantages of each will be much easier to identify and consider when you're formulating an action plan.