Do you or your team manage Special Financing Districts (SFDs) such as maintenance districts, benefit assessments, or parcel taxes? Do you find revenues constantly fall short of expenditures? You are not alone. Understanding the costs associated with the provision of maintenance and services is critical to ensuring an agency collects sufficient revenues to cover expenditures.
NBS heeds the challenges our clients face due to increasing costs of service, while revenues remain stagnant. Often this disparity stems from the lack of any inflator on the revenue side, and may be resolved via a rate increase proceeding for the SFD. Other times the revenue and expenditure discrepancy relates to the difficulty of tracking and allocating the cost of service to SFDs and/or general fund accounts. Utilizing cost estimation and budgeting tools to evaluate and analyze future costs can help clarify whether the lack of revenue is the true issue.
In implementing cost estimation and budgeting tools, it is important to incorporate all costs an agency will incur—both direct and indirect, operations, maintenance, and overhead, as well as a capital replacement program. The cost information can be derived from historical material, industry estimates, and/or actual costs. Actual costs are the most supportable and accurate, but difficult to ascertain in many cases.
Often, we find agency costs such as staff time are missed, utility charges understated, and a capital replacement program has not been implemented to address depreciating assets that need to be repaired and/or replaced over time. Budgeting may focus on annual costs without planning for those larger periodic costs.
NBS employs a tool to assist agencies with estimating costs to ensure future district formations don’t fall short now and into the future. The tool can also analyze existing SFDs costs to determine if new or updated funding mechanisms need to be implemented to achieve the desired funding goals.
For the long-term health of those districts, it is critical to have such tools in place to accurately estimate costs for new SFDs and to set rates accordingly. These tools are also essential to address those revenue and expenditure gaps in existing SFDs.
NBS can help you understand and estimate your agency costs. Contact us to learn more or to schedule a demonstration.