Value Capture Webinar Series

Capacity Building Webinar:
Value Capture: Capital Improvement Plan - Raw Transcript

July 18, 2019



Stand by for realtime captioning.

>> Think you are standing by. Welcome to our webinar. At this time, all participants are in listen only mode. Later we will conduct a question-and-answer session, instructions will be given at that time. If you require assistance, press star zero. >> On behalf of the federal highway and ministration I would like to welcome everyone to today's webinar. I am with the U.S. Department of transportation in Cambridge and I will monitor today's webinar as well as facilitating questions and answers helping address technical problems. On the top left you will find the audio call in information below that is a chat box. You can use that to submit questions to the presenters throughout the webinar. You can ask questions by pressing star one. You will receive more instructions about that later. If you have technical difficulties, use the chat box and send a private message to me and I will help you address the issue.

Our webinar will run until 230. We have two speakers, Kevin Moody from the resource center in Atlanta Georgia and Tammy Starr, program manager from Salem.

We will cure questions for presenters at the end of each section and we will anticipate having a few minutes at the end for additional Q&A. The speakers presentation slides will be available for download on the left side of the screen at the end of the webinar.

Before we end the webinar, we will have a poll question we would like you to answer if you could take a few moments before webinar concludes to answer those questions. Once you do that, you also have the opportunity to request professional development hours for your organization. You will be able to send that request to value We will provide more instructions regarding that leader in the webinar.

Before we begin, we would like you to answer our introduction questions.[ Group is being polled. ] We will give you a few moments to complete those questions.

It looks like we have participation from a lot of different groups today. It looks like you have different familiarity with the subject matter. Thank you for taking time to complete those questions.

I would like to turn the call over to Kevin Moody to start off with today's presentation. >> Hello. I am with Federal Highway administration technical resources center. I am part of the value capture implementation team. >>

Termite everyone and refresh your memory, every day counts is a program of federal Highway administration instituted where we identify and push rate practices that are underutilized by the transportation sector there. There is a new round of innovative practices identified and highlighted every couple of years. We are in the fifth round. Federal Highway administration is an agency focused on safe, reliable access and mobility. Primarily delivered to the national Highway system our business lines include stewardship of that national Highway system which is usually owned and operated by a state D.O.T. or local agency as well as offering technical assistance for transportation asset owners and operators are off the national Highway system.

EDC five has a bunch of initiatives. They go all in on innovative practices that can be helpful for off system asset owners and operators as well as federal aid, federal land system owners and operators and national Highway system.

As a reminder, there's about 4 million lane miles a public road in the U.S. Only about a quarter to third depending on how you measure are part of the national Highway system. When we talk about access and mobility, the vast majority of need is off the system, outside the stewardship role and into the technical assistance role. >>

The value capture is a set of revenue techniques. We will describe and show the visual here. The key is, we are highlighting parts of the solution space that may not be for my with and we know are underutilized.

Specifically, we are trying to highlight practices and tools that identify the people and properties that benefit most in terms of value added to transportation products and there are value capture revenue techniques to cap those players, get some of that value they realized and bring it back to reimburse the project or pay for the next project.

This is about expanding the solution space of funding and financing. The techniques complement more traditional sources and can make your transportation funding plan more robust. >> There are couple things were trying to do. The value capture has implementation team. We are working to expand revenue techniques repertoire for all transportation asset owners and operators.

We are trying to help get you optimized and effectively using all those available sources of funding and financing. Minimize lifecycle costs and hopefully through this process, you can maximize community benefits and returns from public road investments.

We will spend a few minutes talking about an introduction. We will shift you to the next speaker who will showcase a great example. One of the key things to recognize, number of states require for local governments to be able to use value capture revenue techniques, the state law is required those the projects and techniques be identified in a capital improvement plan. >> It's a good place to remind everyone that plans like environmental impact analysis are about linking technical and scientific knowledge with action. If you invest in this road this way, here are consequences, good and bad. The approach of a given plan takes will determine utility choices your community has. I won't get into details but, those the nuances Tammy might touch on.

>> The capital improvement plan, we talk about a multi-year plan, 5-10 years. Is reviewed annually. I personally find the more superior plans tends to be shorter, closer to five and 10 years. They identify projects, priorities, funding and finance options. They are used by city and county governments to identify and justify capital improvements and to coordinate funding, financing and timing of project delivery.

Comprehensive plan is the benchmark. Capital facility requirement should be based on a thorough analysis of future growth, appropriate levels of service and establish a clear and logical connection and think of the term rational nexus. >> Between anticipated growth and type and amount of capital spending.

Should include population and the land-use projections, establish appropriate levels of service for public facilities, examine existing service levels, identify capital facilities needed for new economic growth.

One of the things within federal highways, we are excited about, they tend to be the clear link between transportation projects and land use. >> I will talk about value capture revenue techniques appropriate for capital improvement program.

I don't know how many of you have been through webinars, we have done a good job of exploring but I will give you one short bullet. Impact fee.

Special assessments.

Transportation utility fees, periodic recurring payments to the government's made by property owners or businesses based on trip generation or a metric like that.

A specially defined incremental tax that returns to you, so the financial gains generated by your project. >> Depending on where you are, where your cities chief financial officer, there might be different terms. >> In our unscientific review of capital improvement programs available online, we see three flavors. Standard that addresses deficiencies and lists the projects prioritized and the funding of financing options and that's it.

We are seeing an increasing number of CIP we will call comprehensive. They're talking about all users, safe and reliable movement of people and vehicles.

There's not a great body of evidence we have seen a few transitioning to sustainability. These are where local government can be at street or neighborhood level identify a desired future condition or outcome. The infrastructure changes improvements that need to be made to get there.

What we are talking about is how are we going to prioritize projects, coordinates, funds, finance and deliver. In a sequence that shifts us to desired future condition. These are multi-assets management strategies. We see them when we look at gentrification with social justice. We see it in eco-districts, we see it in communities looking to create resilient infrastructure where there is an danger of cascade effects. >> Part of my job is to help you recognize how outstanding the capital improvement program is. A great CIP is about the organization. It will hint at the structure continuous improvements learning organization culture, a public involvement process and outcomes-based process that lets the community see their desired future in the plan project by project. They can see where the city is taking the infrastructure and how that meets the vision the community has sets. It will have a logically coherent map of means and ends, transportation assets and it will have transparence models of assumptions and relationships that go into the system and the network, how changing one part of the network creates a feedback and other systemwide impact.

We won't talk about that here.

I want to talk about capital improvement programs. Many states require capital improvement programs before a local government can use a value capture revenue technique. We have two words in that role it down there, there are two words, rational nexus and proportionality that are legal validation your model of how the system works is correct. When there's litigation over an impact fee, it will be did you demonstrate proportionality?

We want spend a lot of time on that here but those anytime you deal with Realty people, those will be words you need to make sure you are knowledgeable about.

A good CIP should also describe the use, intensity and future service standards people pay for. >> Stepping back, it's a signal to private investors. It's telling them what you are going to do and signaling where they can get the most value.

We use is it what optimized sources of funding available for public road owners and operators. We use it to maximize community-based outcomes and minimize threats to individual project delivery schedules.

We went a good understanding of the strengths of fiscal multipliers and spillover effects. Most of you know the science is nowhere near giving us that we have today are protocols for marrying traffic models. We use those protocols to forecast how the private sector will respond to our public investments.

We look at outputs like jobs, salary, things that matter to the community. >> Some project categories integrated into CIP, general improvements in the community, here's where we distinguish between improvements and repair or preservation. We can focus on just roads or if it's more community-based, we will get into a broader range of sectors. >> We will talk quickly about elements. I don't know how many are familiar with the term influence diagrams. Is a way of describing fundamental objectives, what makes that take and with performance measures,

The reason we talk about influence diagrams, that is the transparent picture for the public to see what they are describing as a thing they value, the desired future condition. The influence diagram also is a way to blunt the tendency of many elected officials with convention center Follies. They get fixated on something as a solution, when you have influence diagram or something like that lays out the objective and it includes good salaries, jobs, quality-of-life, the convention center, the thing they have latched onto walls into place in terms of where it really belongs in the process.

This is a way to help specify community-based desires for future conditions.

The other elements and funding and finance solutions. >> This conceptual model, the math varies. The literature, this is found as far back as 1920 for business location models. At its core this is the model we use even in environmental impact evaluations. >>

This is how we forecast improvements changes to our system triggered by whatever improvement we make.

Looks at the core gravity model to think about creating bowls of attracting. Is a conceptual model generated. As recently as 10 years ago, National Academy of Sciences was promoting it for multisystem resilience.

It's a robust tool. We have more modern nuanced stuff but this basic model is still legitimate.

It helps us forecast how the private sector will respond in terms of spatial patterns, respond to public road investments.

It's worth pointing out's, when we go around the country we see this a lot. A capital improvement program isn't about, it doesn't generates new private sector investments. All it does is help influence the direction and change in pattern in place location of those investments. We are not generating new income, we are putting it's in a pattern that will have beneficial secondary effects for the community.

There are places where generates new money but that is rare.

We will go through the capital improvements program process. I would like you to think about the transportation asset as a platform for things that happen around its. You think about within the first 1/10 of a mile on either side of a road, what does it need to look like if you're going to have pedestrians walk through their, if you will have economic activities, that vision needs to be consistent throughout these plans. It's not we can do hundred thousand but here are 20,000 and their. If you use a platform like a road, CIP is the place where we marry that across the plans. >> What we have to do to maintenance now and in the future. There will be, we move from plan development into getting the approval from authorized officials depending on where you are, that can be city Council, Mayor, we get it approved and you still have to continue that community engagement.

At that point, depending on your process. Or you are working with local money, bring in your consulting engineer to do the planning right away. >> With land-use of forecast the value created by that Lincoln expands financing solution space available. A particularly opens non-general fund sources. This is a little difference from the way we usually do business. It's a challenge for us. The general fund is used to fund certain Street projects and here are examples. Lisa for storm drains, municipal storm systems, trash capture projects.

Last, we see federal agencies kick in trying to do the same thing at different scales for different purposes but we have Department of commerce, economic development and demonstration to ecosystems and U.S. Army Corps of Engineers to integrated water shed management. >> Please submit any questions in the chat pod or you can ask questions over the phone.

Are there any questions?

If you'd like to ask a question, press star one on your telephone keypad. There are no questions at this time.

We may have a question coming in through the chat pod.

Can you provide any recommendations for city interested in pursuing traffic impact fees but there is no enabling state legislation. >>

I don't have any specific city. It had to have a state enabling legislation but implement the impact fee would be at the local level. That means the city would have the ordinance or the county would have the ordinance and permit to do the impact fee the state will provide that the impact fee had to be the decision at the local level. Does that answer the question?

You can always contact us. We will look for specific examples of people you can reach out to. If you remind us an email us that value capture at,

go ahead and send that if you have follow-up questions or you want us to delve deeper into that. >> I would like to introduce the program manager for the city of Salem Oregon.


My visitation, I'll try not to go to in depth. Do you want to give your process of what we do here at the city. The budget office, they work out of the city manager's office and they're responsible for the document period the public works department puts the document together, bets everything, we have committee meetings I have been with the city for 14 years working in the public works engineering division. I am not an engineer. I am charged the lead for the capital improvement program and I had all the capital construction projects budget which this year is about $200 million. Our guiding documents which counsel came up within 2008 to help direct our CIP. What we are trying for now is to get better and better. We value we have to be prudent with financial management and our capital improvement plan is part of that.

We create improved, maintain, repairs or replaces an asset which results in inventory valued at 50,000 or greater. There is a useful license a useful life of five years or more. We do not include stock or equipment. Unless equipment is at our water treatment plan or wastewater treatment plan. >> Of our current needs we have ever structure committee, CIP committee always include the end-user. Their staff from engineering planning operational staff and we have started this past year, 10 month program. Our program runs from May-February. Our first year we were working on it. That's why we work on a 10 month January and February we tried to finalize our budget, make sure our first year is clean everything is balancing. We have submission of issues that come from operational staff from community members, it could come in from because of the development that is occurring and we might have that for growth projects, they may reimburse developers for oversize infrastructure. We do the scoring and prioritizing. I work with an engineer and we do the programming. All the issues come in, they're scored prior ties by the team and we do the programming. We go over everything for their input and we finalize our plan and it goes to city Council with a public hearing. Then we move on to the work, more public outreach and normal designs and awards construction. That helps transition us. I will show you, when I submitted to my executive management team and what went to the budget office to get the final presentation presented to counsel.

In this we had approximately hundred 43 projects across the city. Most of those coming from public works but included general fund projects such as information technology, facilities projects for those buildings and structures owned by the city. We also have in their, building a new police facility. We have a few buildings in there each year. One of our goals this year on utility projects, if you remember your CIP plan is just a plan. Hours is ever changing and flexible. I can tell you we had an issue and think of a popcorn popper and all of your projects, put them in a popcorn popper and you get a notice you need to find $80 million. We still try to stick with our R&R. Weatherby on utility projects or transportation, there is a, those of the first things to go. We have targeted 3% each year per utility. We were able to do that over a five-year period. We have about $20 million we have planned for R&R. Our funding, we get our rates. It's funded by utility rate. We are asking for a revenue bond you have been approved to get. The system development charges that come from developers done in the community which is very robust right now. We have other types of funding. The team score 298 projects this year. We prioritize those. This is the first year transportation criteria was developed and we scored those projects. We want to make sure we get those projects in there and we have the public hearing. Everything was approved. One of our big deals, we had toxins last year in our drinking water. We had to come up with $80 million to do those planned improvements over the next three years to address that. We will be building a $40 million ozone treatment facility. I try to focus on big projects that come through. Our R&R projects, Willow Lake facility. Transportation projects are a little different and I don't necessarily focus on them here.

Most of our money for transportation comes through a bond that goes to the voters we just finished one last year, hundred million dollar transportation bond and a lot of our funding comes from state gas tax as well as federal and state money.

We talking about the master plan here that we are working on. Our base and plans were completed and will finish that up this year.

This is big on the utilities. This tries to tell everyone where their money is going. It is a big deal for the community to know where their dollars, we've only had about 3% rate increases each year. So far we have been lucky and have a good day. Here is our allocation by category. The airport, the buildings, in our CIP we don't have carryover projects and there. There only projects that are getting new or additional money. It's either a new project on all project that needs additional fund. That's why under buildings, you don't see an $80 million number for the police station. These are our funding sources. The airport and federal dollars we have city local we work with. Donations for parks. Our general fund is mostly for information technology and facilities the city owned. Our local and state federal grant. We are putting in a large cogent right now. We have some money there. The rest is transportation. The revenue bond, we just got news last week the Oregon legislature is giving 20 million per hour ozone plan.

Our system development charges, developers are developing that money is coming in. I can only be used on growth related projects. State highway is our gap tags. We get some money from transient occupancy our utility Raven urban renewal agency that public works engineering does project delivery. We get funding from them as well. >> This is our issues inventory were we call projects.

You submit a project, we call them issues in our database and these are the issues that come in, how many are there, are they programmed over the five years, what is the percentage? We watched this carefully so when we meet monthly with all of our different info structure committee is, this is a big deal. We want them to come in early. We want them to be added. That is something we try more and more each year. How can we do that better? Looking forward for us, the biggest thing we found was project description. People might send us says we need a water line out here or repave the street and that is it. We found that while we were prioritizing and scoring we have criteria based on and six different criteria and sets. We are updating all of our description and that will help estimate scoring and prioritizing I work hard to make sure the top 20 projects in each if a structure category is estimated and that means a person puts it in, it comes through, we put a map with it. As much information as possible, comes to engineer. They do the estimating, some of those come from consultants and when that occurs we still have a process with engineering division will that estimate to make sure our costs are there so we are not dumping money in the following year. We are making sure what we say the cost is, that's what the cost is. Were trying to come up with an escalator. Especially on parks. Construction costs are really high. We need to work on that cost escalation. We are thinking about potential policy changes. Is 50,000 a good number? Storm water came in, the master plan and those projects were huge. We had master plans for the storm water and we are looking at those projects, can we face them out? We worked really hard on public outreach. That wasn't something that was done in the past. We want to educate our public. We have an open house each year. We started attending that. Typical of the projects, it's our Street. We put out flyers. We are attending all the neighborhood meetings. Salem has about 25 neighborhood associations throughout the city. We have the public hearing. I take lots of phone calls from citizens. Another thing I want to start working on this year was instituting a process to ensure our project apply with title VI. Making sure projects are spread out through the city. Make sure they get served as well.

I would like people to take away from this, if you have never done it, just remember it is a plan and it can change. Is the most difficult thing for people to understand and public outreach with the community, our community was very good because we had projects we had to take out and put out another 3-5 years and beyond do to our water. This is just a plan and it's can change. We follow the plan as best we can.

Hopefully I haven't left anything else. We look at infrastructure if we are putting in a water line and we have a project in year 3, we have economies of scale. Is a need a new overlay? We are putting a sewer line, we try to put those together as well as no cut list. If we put in new paving, unless there is a dire emergency, that street is not cut into for at least five years.

That's all I have. Are there any questions? There are a few questions. For now, we will ask questions in the chat pod. Are issues scored? Are they the same as projects?

I get this question a lot. We have some new software for the budget office. In the module they call it issues. It typically turns into a project. Those issues are score. The only ones not scored our city facilities or I.T. Everything else is score. We didn't score the library seismic for the police facilities because those were voter issues and residents voted on that.

Does that answer the question?

Let's move to the next question. Can you provide criteria used to score projects?

Yes. We have two different sets of criteria based on funding source. Then we have scoring for utilities and we have two different types of criteria for transportation. Those will be the criteria that we use. >> Show that email as the end. To have software programs to assist you with your process?

Yes. For years, we use Excel and access. I think it has been two or three years now. It's called order software. That's what we use, it flows into our budget.

It stores the issues and projects and is very helpful. We download that when I'm working with our committees each month. It's a useful tool if you would like more information, I am able to provide that.

Thank you. We have another question. What are title efforts you are making?

Right now, our GIS department map all of our projects for the on our website. There doing statistical information for underserved communities. We have certain sections where more lower income families live. Making sure projects come in that we are identifying those and making sure on our criteria, one of our criteria has to do with title VI. Will this project meets it, exceed it. That's what we are doing now. If anyone else has any suggestions, I would love them. At something new we are working on. >> How do you relate your CIP with planning and programming processes?

Are planning, those projects on Mexico in when grant applications are put in. Performance measures, we haven't had a lot of those. We are doing party-based budgeting so we will see more of that.

That's the best I can answer that question. I believe I heard you say you don't have any carryover projects? Just new projects and projects that need more money. How do you define a carryover projects and also clarify this in the next statements.

A carryover project is a project will fill transportation doing a widening. When we first put it in, we may know the entire dollar amount we are getting and our match money. The first year, it's in there and we think we have the right amount of money in there. Sometimes those projects are two or three year projects. If we have right away design construction, say the third year will come back when we are at that point and say, we have this amount of money in our federal money anymore match money because we are going over. That project would be back in CIP and there is a total that says prior years funding just have I might budget the project but in the glamorous a cousin. That is the new and remaining was in a prior year.

It's already shown up. This year we had several transportation projects we updated match money and they went back and. For someone would like to know if you can repeat the name of the software that you used?

It is called board. It was implemented and installed with a company called new brand. Like you happy to send. >> Like that last question. If we have any questions ? >>. As a reminder, I would like to provide everyone Kevin and 10 email address. Is here.

I will also say, you can for value capture questions you can send it to our general email and that will be available to all the implementation team members. It's value capture at the bottom of that slide you see there. >> Thank you. With that, we would like to let you know about our upcoming webinar. We have a webinar coming up next week on July 24. That is value capture special assessment techniques in case study. We would like to wrap up today's webinar and please answer a few poll questions. We have a couple of questions on the screen now.

Following these questions, there will be additional evaluation questions. As a reminder, if you respond to those questions, you can request professional develop meant hours and request those by emailing value capture at You can do that once you respond to the evaluation questions and those will be on the screen shortly.

For now, if you could answer the questions on the screen.[ Group is being polled. ] Please continue to submit your answers.

With that, we will and the poll questions and move to our evaluation question. The first two questions are on the screen. Also, you can download the presentations today from Kevin and Tammy on the left side of the screen. They are in a PDF format and you can download those at any time.

Questions on the screen now, today's topic agenda relevant to my success and my job. [ Group is being polled. ] Please respond accordingly. We will give you a moment to do that. >>

Will move to the final set of questions. If you could respond. Presenters were effective in using web conferencing.

My problem using web conferencing if you could enter your additional comments in the last poll pod. That be great. I will give you a few more moments to respond to that. >> If you took the time to respond to those final evaluation questions, you can request professional development hours by emailing value capture at We thank you for attending and presenters for presenting. That will conclude today's webinars. Thank you. >>

[ Event Concluded ]