Use this information to answer the next four questions:
The city of
The city council has adopted the following weights for the CIP criteria: Health (5), Safety (5), Economic Development (3), Cost/Benefit Ratio (3), Quality of Life (1), and Housing Stock (1). Of the top 15 capital improvement projects, three are slated to be funded specifically by revenue-sharing money (ratings for the various CIP criteria are in parentheses):
A new motor grader for the streets department ($150,000), (0,1,3,1,0,0) will be funded from the capital reserve fund.
Two projects are slated for revenue bonds:
The remaining projects are to be funded by whatever funds are available:
1. Calculate the annual capital improvement budget for these projects, continuing the analysis for five years or until all the projects have been funded.
2. Suppose the council decides that it had not given proper consideration to the criterion weights, and upon reconsideration has decided that the proper weights are: Health (5.5), Safety (4.5), Economic Development (3.5), Cost/Benefit Ratio (2.5), and Housing Stock (1.5). What difference (if any) do these new weights make in the ranking of the projects? What does this imply about the sensitivity of the tool to criterion weights?
3. Suppose the city hires a new manager, and she takes a more aggressive position in relation to debt. The new debt/revenue ratio is now 14%. What difference will that make in the five-year capital improvement budget?
4. Suppose the manager decides that annual five-year CIP budgets are too exhausting, and decides to go to do a new budget every four years. How will this change affect your strategy in dealing with retained debt capacity? What difference will that make in the five-year budget you prepared earlier?
5. The top 10 capital improvement projects for the East Central Economic Development Region, and their relative ranking, are as follows:
14 New city hall and fire hall, Isanti city
9 Repair fire hall, Dalbo city
7 New courthouse, Isanti city
7 New fire truck,
6 Senior citizen center,
5 Tri-county jail, Isanti-Kanabec-Pine counties
3 Hospital remodeling, Mora city
3 Water system addition, Mora city
1 Sewer replacement in industrial block, North Branch city
1 New fire hall, Rush city.
Assuming the commissioners used the six criteria on the spreadsheet, and ignoring the possibility that commissioners might deviate from the criteria to favor pet projects, reconstruct the scoring and weighting that might have been used.
© 1996 A.J.Filipovitch
Revised 11 March 2005