What Can Capital Program Management (CPM) and Processes Mean to the Bond Rating of a Municipality?
As was evident from ASCE’s 2005 Report Card for America’s Infrastructure as reported in CIPPlanner’s ACE June Newsletter the infrastructure across the U.S. is in a major state of disrepair. As a result, the need of municipalities to address this issue has become a critical driver in setting the agenda and direction that they are to take over the next 5 – 10 years. In fact a number of municipalities have embarked upon a task of establishing 10 and 20 year planning horizons in an effort to understand the magnitude and impact of this challenge.The underlying question faced by municipalities across the U.S. is very straight forward…. where will the money come from and how will it be managed going forward?
Obviously there are numerous fund generating sources available to municipalities to address this challenge including taxation, revenue generating projects, grants from the Federal and State governments, and Municipal Bonds. Each of these options carries its own set of issues, constraints, benefits, and risks and each deserves its own “time”. Having said that, this white paper will address the alternative of Municipal Bonds as a means of raising the necessary initial capital to undertake the financing of a city’s or municipality’s capital program and will do so in the context of Capital Program Management (CPM) including the process required to effectively plan and implement Capital Programs. This paper will not attempt to evaluate or comment upon the metrics, performance indicators, or criteria used in determining a Municipalities Bond Rating and in turn its probability of securing the financing necessary to meet its objectives and needs.
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