2. Planning and Finance for Local Transportation / Infrastructure Charles Vanek  PA 8202  April 9, 2003

3. 2 Finance and Planning for Local Infrastructure Traditional Financing Where does the money come from? Where does the money go? Alternative Financing Why use it? Planning Process Capital Improvements Evaluation of Projects Summary/Q & A

4. 3 Traditional Financing Where Does the Money Come From? The (MN) Hwy User Tax Distribution Fund is funded by two sources: Fuel Taxes Vehicle Licenses 49.7% 50.3% Hwy User Tax Distribution Fund (HUTDF) $1,180MM

5. 4 Traditional Financing Where Does the Money Go? State revenue accumulated in HUTDF is pushed down to State/County/Municipality level through MnDOT Hwy User Tax Distribution Fund (HUTDF)

6. 5 Traditional Financing Where Does the Money Go? MnDOT state revenues are combined with other types of financing

7. 6 Traditional Financing Finance Concepts These ideas form the basis for all financial theory Dollar today worth more than a dollar tomorrow (the time value of money) Risk v. Return rise and fall together OPM is good; leverage increases potential size of project Liquidity (cash) is convenient, lessens risk Accounting: Capital expense v. Operating Expense

8. 7 Alternative Financing Why use it? Used to address problems with traditional financing State Infrastructure Banks (SIBs) GARVEE Bonds Transportation Infrastructure Finance and Innovation Act (TIFIA) Tax Credit Bonds Tax Exempt Bonds

9. 8 Alternative Financing Why use it? Alternative financing benefits and related finance concepts

10. 9 Alternative Financing Benefits and Drawbacks Alternative financing risks and tradeoffs: total costs go up, payments back loaded

11. 10 Alternative Financing Benefits and Drawbacks Alternative financing risks and tradeoffs: costs to state vary depending on financing

12. 11 Planning Process for Infrastructure Capital Improvement Once money has been allocated, then projects get prioritized Total amount of available money is established for transportation Projects presented Projects prioritized by rating system Recommendations to City Council (non-binding)

13. 12 Planning Process for Infrastructure Evaluation of Projects Minneapolis embeds the evaluation process with its City Goals and finance optimization City Goals ProgramObjectives EvaluationProcess RatingSystem CLIC Rec’s And Report

14. 13 Planning Process for Infrastructure Evaluation of Projects The Evaluation Process: City of Minneapolis Goals  Build communities where all people feel safe and trust the City’s public safety professionals and systems.  Maintain the physical infrastructure to ensure a healthy, vital and safe City  Deliver consistently high quality City services at a good value to our taxpayers  Create an environment that maximizes economic development opportunities within Minneapolis by focusing on the City’s physical and human assets.  Foster the development and preservation of a mix of quality housing types that is available, affordable, meets current needs, and promotes future growth.  Preserve and enhance our natural and historic environment and promote a clean, sustainable Minneapolis  Promote public, community and private partnerships to address disparities and to support strong, healthy families and communities.  Strengthen City government management and enhance community engagement  Build communities where all people feel safe and trust the City’s public safety professionals and systems

15. 14 Planning Process for Infrastructure Evaluation of Projects The Evaluation Process: Rating system for projects City Goal Finance Goal Finance Goal Finance Goals

16. 15 Planning Process for Infrastructure Evaluation of Projects The Evaluation Process: My ratings for Camden Ave. Bridge Rehab

17. 16 Planning Process for Infrastructure Summary/Q&A The Big Questions What are the reasons for the complexity of the allocation process? How does proportion of allocation tie into public policy goals? Present v. future. Regional vs. Local (Equity issues and who pays?) What weighting should we give to financial goals vis-a-vis other public policy goals?