Regionalization: The Problem with Finances

Regional projects are able to bring together a variety of local partners to help provide the highest quality utility services that are needed. These projects often make sense to help communities and partners benefit from the economies of scale of doing large infrastructure projects. While the project may make sense, the nature of a regional project means individual communities may not have the broad with the demands of them. Due to these factors, the role of financial planning in helping communities and utility partners understand the implications of their decisions now and into the future is critical in developing regional projects and will lead to the ultimate success of these projects. This paper will outline some of the key items to consider at the various stages of a regional project planning with insights from regional projects under development in the Dakotas and Montana. We break the financial planning for regional projects into three key parts: project development, project construction, and ongoing project operations. Project Development working through initial organization of any governing entities we will address questions such as factors in understanding economic impact of these projects, how ownership decisions relate to long-term financial obligations for partners, and the role of project phasing and affordability. Project Construction construction phase items are substantially different than development items, in tracking and managing the funds, deciding when and how to start charging users, this is often when the management structure of the regional utility starts to cut its teeth on the financial operations of the utility. Ongoing Operations while the project may be starting fresh this phase addresses items such as, developing long-term renewal and rehabilitation plans and setting policies and procedures for rate setting. While every regional partner is different and will present different challenges the goal of this paper will to provide some of the key items that will need to be addressed and allow those considering regional projects to start thinking through how some of the key items may impact their project.