selling your project to the board

SELLING A PROJECT TOYOUR COUNCIL OR BOARD

Brian GongolDJ Gongol & Associates, Inc.

August 27, 2014

Iowa AWWA Short Course

A preview

Funding considerations Getting the board...on board Helping the board win over the public Funding strategies Funding sources

FUNDING CONSIDERATIONS

Three elements of financial success

Recognize value Think long-term Recognize what's extraordinary about your own times

Today's interest rates are at long-term lows

Costs after inflation

Borrowing for 30 years around 1975

QE/tapering -- what it all means

Setting your rates for water services

Slow, predictable increases

Not big jumps every 5-10 years

Buy right, not just cheap

Borrow when you don't need the money

Match costs and payments to the life cycle

How to get what you really need

Sometimes there's an "or equal"...sometimes there's not

Continuous improvement

Lean operations Life-cycle costs

GETTING THE BOARD ON BOARD

Show how your problem is their problem

Or how they have a problemand you can help them steer clear

The illusion of choice: Two options

The illusion of choice: Three options

What's the worst that could happen?

Make them feel the real hazards of inaction

Actual liability

Insurance costs

Headline risk

Help them take credit for successes

Demonstrate payoffs

Nothing works as well as hands-on exposure

Host a lunch or a party

If there's resistance, ask why

Make them prove your point:Do they think your workplace is unpleasant?

If so, all the more reason to fix it.

A challenge to us all

Brightwater WWTF (King County, Washington)hosts parties and wedding receptions

Small commitments: Get them in the door

Why car dealers offer test drives

A trial implies commitment, andcommitment cries out for consistency

Everyone falls for "multiplier effects"

Since 1997, the average NFL stadiumhas been 56% public-funded

Skip the word "environment"

Talk about public health

Open with a big request

No exaggeration required Then retreat to what's really necessary

Acknowledge real limitations they face

Cultivate a fiduciary mentality

Benchmark against your neighbors

Peer groups of comparable communities

TO THE PUBLIC AT LARGE

Tailor your message to community values

Iowa City and Grinnell

Environment Climate change Ecosystems

Council Bluffs, Des Moines, Cedar Rapids

Levees Recovery Backups Urban improvement Tax base

Northwest Iowa

Heritage of service Obligations Independence

Put spending in context

How many dollars is a 10% increase, really?

Be sensitive to fixed-income households

Don't let a "water is free" mentality take root

The default opt-in trick

Look carefully at your next hotel bill

Context, context, context

"Be fearful when others are greedy,and greedy when others are fearful."

- Warren Buffett

Water vs. other costs per gallon

Water towers vs. cost of fire protection

Sewers vs. time cost of septic systems

How old is it?

Are your pumps from the Cold War?

How old is it?

Are your valves as old as disco?

How old is it?

Are your mains from before WWII?

Visibility

Any idiot can recognize a broken bridge

Visibility

Any dunce can seeand feel a pothole

Visibility

But by design, nobody sees underground utilities

People don't vote for water

Don't ask people to vote for water Ask them to vote for fire protection, public health, and jobs

Cultivate a sense of ownership

FUNDING STRATEGIES

Buy from cash

Buy with debt

Buy with grants

Rent (short-term)

Lease (long-term)

Don't fear the leaser (er...lessor)

A third of all airliners are leased worldwide Railroad cars are also heavily leased Most office space is leased

Leasing algebra

Cost of management/depreciation/upkeep + profit<

Customer's cost to learn and do same

Lease to own

Shared ownership / buying clubs

28E

The purpose of this chapter is to permitstate and local governments in Iowa

to make efficient use of their powers byenabling them to provide joint services and facilities

with other agencies and to cooperatein other ways of mutual advantage.

This chapter shall be liberally construed to that end.

Privatization

FUNDING SOURCES

For each source, consider your constraints

Maximum amount available

Minimum commitment required

Time horizon

Looking for money in all the right places

Debt

Grants

Green funding

Emergency/disaster-preparedness funding

SRF

USDA

CDBG

WIFIA

Rainy-day fund

Capital improvements fund

Municipal bonds

To recap

Know what's extraordinary about your times Think ahead and make it easy to agree with you Get people on board as automatically as possible Consider all of your available strategies Consider all potential funding sources

Questions?

Thank you for coming!

Thank you for your attention!

Contact us anytime with questions

Brian Gongol DJ Gongol & Associates 515-223-4144 info@djgongol.com

References:

Municipal bonds http://research.stlouisfed.org/fred2/graph/?g=IpZ

http://research.stlouisfed.org/fred2/graph/?g=Iq3

Money velocity http://research.stlouisfed.org/fred2/graph/?g=Iq5

WWTF as wedding venue http://www.kirotv.com/news/news/sewage-treatment-plant-advertises-wedding-venue/nfW7K/

http://www.kingcounty.gov/environment/wtd/Construction/North/Brightwater.aspx

Airliner leases: http://www.economist.com/node/21543195

Public financing of stadiums: http://cbsminnesota.files.wordpress.com/2011/12/nfl-funding-summary-12-2-11.pdf

Jimmy Carter photograph: http://www.loc.gov/pictures/item/96522672/

Harry Truman photograph: http://www.trumanlibrary.org/photographs/view.php?id=2267

Margaret Thatcher photograph: http://www.loc.gov/pictures/item/2005696424/

Bill Gates photograph: http://www.microsoft.com/en-us/news/exec/billg/images.aspx

All other photos are original work by and copyright reserved to Brian Gongol