Download - Selling your project to the board
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SELLING A PROJECT TOYOUR COUNCIL OR BOARD
Brian GongolDJ Gongol & Associates, Inc.
August 27, 2014
Iowa AWWA Short Course
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A preview
Funding considerations Getting the board...on board Helping the board win over the public Funding strategies Funding sources
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FUNDING CONSIDERATIONS
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Three elements of financial success
Recognize value Think long-term Recognize what's extraordinary about your own times
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Today's interest rates are at long-term lows
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Costs after inflation
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Borrowing for 30 years around 1975
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QE/tapering -- what it all means
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Setting your rates for water services
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Slow, predictable increases
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Not big jumps every 5-10 years
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Buy right, not just cheap
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Borrow when you don't need the money
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Match costs and payments to the life cycle
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How to get what you really need
Sometimes there's an "or equal"...sometimes there's not
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Continuous improvement
Lean operations Life-cycle costs
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GETTING THE BOARD ON BOARD
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Show how your problem is their problem
Or how they have a problemand you can help them steer clear
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The illusion of choice: Two options
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The illusion of choice: Three options
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What's the worst that could happen?
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Make them feel the real hazards of inaction
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Actual liability
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Insurance costs
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Headline risk
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Help them take credit for successes
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Demonstrate payoffs
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Nothing works as well as hands-on exposure
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Host a lunch or a party
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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.
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A challenge to us all
Brightwater WWTF (King County, Washington)hosts parties and wedding receptions
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Small commitments: Get them in the door
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Why car dealers offer test drives
A trial implies commitment, andcommitment cries out for consistency
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Everyone falls for "multiplier effects"
Since 1997, the average NFL stadiumhas been 56% public-funded
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Skip the word "environment"
Talk about public health
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Open with a big request
No exaggeration required Then retreat to what's really necessary
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Acknowledge real limitations they face
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Cultivate a fiduciary mentality
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Benchmark against your neighbors
Peer groups of comparable communities
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TO THE PUBLIC AT LARGE
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Tailor your message to community values
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Iowa City and Grinnell
Environment Climate change Ecosystems
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Council Bluffs, Des Moines, Cedar Rapids
Levees Recovery Backups Urban improvement Tax base
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Northwest Iowa
Heritage of service Obligations Independence
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Put spending in context
How many dollars is a 10% increase, really?
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Be sensitive to fixed-income households
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Don't let a "water is free" mentality take root
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The default opt-in trick
Look carefully at your next hotel bill
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Context, context, context
"Be fearful when others are greedy,and greedy when others are fearful."
- Warren Buffett
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Water vs. other costs per gallon
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Water towers vs. cost of fire protection
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Sewers vs. time cost of septic systems
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How old is it?
Are your pumps from the Cold War?
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How old is it?
Are your valves as old as disco?
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How old is it?
Are your mains from before WWII?
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Visibility
Any idiot can recognize a broken bridge
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Visibility
Any dunce can seeand feel a pothole
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Visibility
But by design, nobody sees underground utilities
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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
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Cultivate a sense of ownership
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FUNDING STRATEGIES
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Buy from cash
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Buy with debt
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Buy with grants
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Rent (short-term)
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Lease (long-term)
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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
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Leasing algebra
Cost of management/depreciation/upkeep + profit<
Customer's cost to learn and do same
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Lease to own
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Shared ownership / buying clubs
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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.
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Privatization
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FUNDING SOURCES
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For each source, consider your constraints
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Maximum amount available
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Minimum commitment required
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Time horizon
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Looking for money in all the right places
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Debt
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Grants
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Green funding
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Emergency/disaster-preparedness funding
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SRF
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USDA
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CDBG
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WIFIA
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Rainy-day fund
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Capital improvements fund
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Municipal bonds
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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
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Questions?
Thank you for coming!
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Thank you for your attention!
Contact us anytime with questions
Brian Gongol DJ Gongol & Associates 515-223-4144 [email protected]
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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