Determine what revenues will pay for your capital facilities needs

This is one of the hardest parts – but a critical feature - of developing your Capital Facilities Plan.  Cities and counties are all struggling for revenue these days, especially the smallest jurisdictions.  However, there are sources of capital funding available.  Some of these are:

• General Fund or Current Expense Reserves for Capital.  Some jurisdictions set aside a percentage of their primary revenues for reserves to finance capital.  By establishing a “savings account” and dedicating funds for capital, the money is there (at least, the matching funds for grants) when the costs occur.
•  Real Estate Excise Tax.  This is a tax of ½ of 1% of the selling price (paid by the seller) paid on real estate transactions.  The first ¼ may be used for a variety of capital purposes.  The second ¼ is limited to parks, water, sewer and transportation infrastructure.
• Utility Local Improvement Districts (ULIDs).  ULIDs are special improvement financing areas within which the voters approve specific projects and property tax levies to finance those projects.  The cost of the improvement must have an associated property value increase.
• Utility Fees.  Water, sewer and solid waste utilities are established to generate revenues that pay for the cost of the service provided.  In many cases, small jurisdictions do not set the rates sufficiently high to generate funds for necessary capital improvements.  Increasing fees to generate capital funds can be a way to pay for necessary facilities.
• Impact Mitigation Fees.  These fees are collected from new development upon permit issuance after a mitigation fee and plan have been established.  That plan involves identifying the capital projects for an area, calculating the total capacity of the projects, and establishing a fee basis per unit of development reflective of the relative contribution to total capacity. Mitigation fees are commonly used to finance new infrastructure concurrent with development, including streets/roads, parks, schools, and other.  The key is to have an adopted plan.
• Grants and Loans.  There are a variety of grant and low-interest loan sources. 

The Infrastructure Assistance Coordinating Council’s website:  www.infrafunding.wa.gov has a comprehensive database of infrastructure grants and loans, including state, federal and foundation resources.  The Association of Washington Cities also has a comprehensive website of infrastructure funds for cities:  www.awcnet.org.

Some of the most common funding resources in Washington state include the following:

• State Public Works Board, Trust Fund Construction Loans and Emergency Loans, eligible for drinking water, waste water, stormwater, solid/hazardous waste, flood/irrigation management and transportation projects. www.pwb.wa.gov
• Community Economic Revitalization Board (CERB) Traditional and Rural Construction Programs and Job Development Fund.  These are grants and loans for drinking water, waste water, storm water, transportation, other utilities and business and economic development facilities. http://www.commerce.wa.gov/site/64/default.aspx
• Department of Health/Public Works Board Drinking Water State Revolving Fund (Loan) and Water system acquisition and rehabilitation (grant).  To be used for drinking water projects. http://www.doh.wa.gov/ehp/dw/Publications/331-405-4-29-08.pdf
• Washington State Department of Community, Trade and Economic Development provides community development block grants on a competitive basis www.cted.wa.gov/cdbg
• Washington State Transportation Improvement Board (grants), www.tib.wa.gov
• Washington State Recreation and Conservation Office provides grants for parks and outdoor programs, www.rco.wa.gov/rcfb/grants.asp
• Department of Ecology Water Quality Division’s Centennial Clean Water Fund (grant and loan) and Water Pollution Contro9l Revolving Fund (Loan) for waste water and stormwater projects.  Centennial funds are also available for public safety projects. www.ecy.wa.gov/programs/wq/wqhome.html
• Department of Ecology Water Resources Drought Preparedness grants and loans, Refernedum 38 – water supply facilities grants and loans and Water Infrastructure Program grants. www.ecy.wa.gov/programs/wr/wrhome.html
• Department of Ecology Shoreleands & Environmental Assistance grants in their Flood Control Assistance Account. www.ecy.wa.gov/programs/sea/grants/fcaap/index.html
• Department of Ecology Solid Waste program has a Coordinated Prevention Grant and Safe Drinking Water Action Grants. www.ecy.wa.gov/programs/swfa/index.html
• US Department of Agriculture, Rural Development Funds (grants and loans) for housing, water and sewer infrastructure and economic development, www.rurdev.usda.gov/rd/nofas/index.html
• Why Plan?  http://cepm.louisville.edu/Pubs_WPapers/practiceguides/PG14.pdf

In addition, The Municipal Research Services Center has a comprehensive web page identifying resources for capital facility projects.   See their web page at   http://www.mrsc.org/Subjects/Finance/grants/grants.aspx 

What is most important is to plan for revenue as well as costs.  A plan that identifies projects and then labels the funding source as “other” is a plan that will never be implemented.  Similarly, it is important to understand that not all projects will be funded with grants.  Use of local funding such as utility fees and capital reserves is also necessary.

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