Services

Capital Improvement Plannning

Northland Securities views capital planning as an essential component of an issuer's overall debt issuance and financing program. Having a long-term plan for future financing needs will enable the issuer to structure current debt offerings in a manner that ensures financings in the future will be cost‑effective.  Establishing policies regarding the capital improvement plan will provide the issuer with a road map of formal written procedures for measuring and making their financial decisions. In addition, rating agencies look favorably on debt issues that are part of a well‑conceived, long‑term plan, as opposed to financings that are carried out in a fragmented or "piecemeal" fashion. Establishing long‑term policies and plans for capital needs demonstrates thoughtful and informed financial management.  Ultimately, implementing phased financings and debt policies will enable the issuer to carry out capital expansion or debt restructuring plans more efficiently, while preserving market access for future debt.

Realistically projecting the growth trends and capital project needs of a community, and then modeling a series of financing strategies to finance these projects, is an essential starting point for a capital improvement plan. A financing strategy involves far more than just a decision of when and how much debt to issue. It encompasses all of the community's development-related policies, including assessment rates, length of assessments, target debt levels and the level of developer and other revenue support for projects.

Usually, planners and engineers are key in determining growth and projecting the long-term capital improvement plans. Northland's role is to generate a computer model to evaluate the financial impacts of a proposed strategy on debt levels, cash flow and tax rates. The process is ongoing and dynamic, as new projects are completed and the needs for future ones are identified. The goal, however, is to assure that the community is proceeding with its financings in a manner that will preserve financial strength, maintain cash flow, and keep tax and utility rates within acceptable levels.