selling your project to the board
TRANSCRIPT
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 [email protected]
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