Capital Projects and Budget Challenges: Finding a Path Forward

As a city manager responsible for preparing the budget, unknowns are inevitable. Sure, you make plans and projections, but events beyond your control create challenges for you as the top operating official in a local government. Yet, some things are certain – the need for: jobs and economic development, planning for the future needs of the community, maintenance of current facilities, and the dreaded infrastructure renewal. How do you meet those needs while balancing an operating budget with minimal cushion to absorb fiscal challenges that could impact the City’s short and long term financial condition?

A recent example of a fiscal challenge is the drying up of monies from the federal government passage of two huge spending bills – the CARES Act and ARPA – as part of the response to the COVID-19 Pandemic. Many communities benefited from this funding for operating expenses, capital budgets, and maintaining staffing levels but this supplement is rapidly concluding, the band-aid is slowly coming off, so to speak. Is there a plan in place to address this challenge?

This phrase has been used in the past that, as a city manager, you deal with it and gain experience by learning to pivot. After all, the ‘to-do’ list of capital needs extends well beyond supplemental funding.

Energy Systems Group® (ESG) can assist with the pivot. We help our clients uncover opportunities to improve their bottom line so they can invest in and maintain their facility and utility infrastructure in a manner that levels out the fiscal unknowns.

Optimize Budgets, Minimize Costs

When times are tough, people find ways to scrimp. However, when cities put off essential infrastructure projects, it can lead to safety risks, a decline in resident and business confidence, increases in energy and insurance costs, and inflationary impacts later. But what can be done when budgets decline due to federal monies drying up or other reasons? There’s cost-cutting, which is always painful, or raising taxes/passing levies, a last resort, especially when inflation has left many families struggling.

ESG can find ways to reduce operating expenses, support your capital budget, and identify new sources of revenue.  Our strategy is to develop an understanding of your needs, challenges, and objectives and then dig through the budget to find pockets of money, locate areas of potential savings, and align solutions with your objectives.

ESG’s expertise goes beyond cost-reduction strategies. Our methods promote efficient decision- making so our customers can move rapidly from concept to engineering to procurement to project execution. We get customers to cost certainty on projects quickly.

Certainty includes something we deliver called performance assurances. ESG believes there is an increasing gap between what works in theory and what works in the real world. We deliver capital improvements that will operate as designed with intended contractual outcomes relating to system performance and achieving projected savings. So, if the project does not perform as we projected, ESG has a contractual obligation to make it right.

Simplifying the Procurement Process

At ESG, we aim to make the procurement process as seamless as possible for our clients. Local governments and organizations can easily advance projects through qualification-based selection methods without being tied to the low-bid process. For instance, in Ohio, local governments can contract for projects using a qualifications-based process. This allows them to select a partner based on professional expertise rather than the lowest bid. Additionally, as a qualified partner through Sourcewell, customers can directly procure our services without going through the formal, time-consuming bidding process because Sourcewell has already done the work. This streamlined approach saves time and ensures that the most qualified professionals handle projects.

There are other procurement channels, such as TIPS, offering even more flexibility for cities seeking to simplify project procurement. By leveraging these alternative procurement options, you can avoid the limitations of traditional low-bid methods, ensuring high-quality results and smoother project execution.

Let us handle the heavy lifting in finding the best ways to make your procurement process efficient and effective.

Ohio Success Stories

We’ve worked with multiple cities throughout Ohio. Because ESG orchestrates much of the heavy lifting involved with the projects, it makes it easy for local governments. With limited staff and resources, our turnkey solution with a single point of contact means a limited staff does not limit the possibilities. Check out these two success stories.

Infrastructure Renewal without Raising Taxes

Facing a range of complex challenges, the City of Huber Heights needed to modernize critical infrastructure, honor its commitments to taxpayers, but contend with 84% of unvoted debt spoken for from previous economic development investments. Aging HVAC equipment made it difficult for the city to maintain comfortable and healthy indoor environments, a critical need elevated during the COVID-19 pandemic. The typical, lengthy procurement process for capital improvements hindered its ability to address urgent modernization needs efficiently and keep up with growing demands. ESG was able to bring expertise to the table to expedite implementation through our direct procurement and project management capabilities.

We provided engineering, design, financing, construction, and project management services for the following project scope:

Through the solutions implemented by ESG, the City of Huber Heights was able to modernize eight buildings while also realizing savings of $949,000 in operational costs and $677,000 in energy costs over 15 years. The $3.3 million project capital improvement project was completed without new taxes.

Facility Renewal Results in Significant Savings on Operating Expenses

The City of Vandalia was seeking a partner to help them create a vibrant community, maintain sustainable fiscal practices, and leverage technology across the city. With original equipment in most major buildings, failure of A/C on the hottest week of the year made it clear that phasing the project over multiple years was off the table.

Moving Projects Forward

As a City Manager, you’re constantly juggling the demands of the city and the available budget. While funding sources shrink or dry up, facility and utility infrastructure needs don’t. ESG helps cities overcome the financial barriers that block essential projects and achieve cost surety. Get ahead of what you are behind on, and invest in solutions that improve livability, workability, and resiliency with our unique funding strategy.