Shoreview, Minnesota's comprehensive infrastructure replacement policy and plan.

• Author: Haapala, Jeanne A.

No more jumping from crisis to crisis for this small city. With its long-term emphasis on replacement costs, Shoreview considers needed improvements well before they become necessary and requires that every rate-setting process consider replacement costs.

Editor's note: Each year the Government Finance Officers Association awards its prestigious Awards for Excellence to recognize outstanding contributions in the field of government finance. The awards stress practical, documented work that offers leadership to the profession and promotes improved public finance. This article describes the 1993 winning entry in the small governments category.

Planning for and financing the replacement of a government's infrastructure is an enormous task. Evaluating assets and their expected useful lives, projecting replacement costs, examining financing options, determining bonding levels, estimating user fees and tax levies, and evaluating the impact on property owners all are important steps in the process.

Entities across the country are addressing this issue in different ways. Some governments plan for capital costs associated with repairs or replacements on an annual basis through the budget process; while others plan for replacement needs through a broader capital improvement program (CIP), typically covering five to six years. Both of these approaches are important parts of any capital planning process; but the council and staff of the City of Shoreview, Minnesota, found that neither provided them with enough information about future replacement needs. Hence, in 1992, the Shoreview City Council adopted a Comprehensive Infrastructure Replacement Policy.

Profile of Shoreview

The City of Shoreview, located on the north side of the metro area between Minneapolis and St. Paul, is primarily a residential community with a population of just more than 25,000. Single- and multi-family residential property makes up 87 percent of the tax base. Commercial and industrial property is slightly less than 10 percent. The remaining property value is made up of apartments, seasonal residences and farms. Supplementing this largely residential tax base are employers such as TSI Incorporated, Micro Component Technology, Curtis 1000 and Deluxe Corporation.

During much of the 1970s and 1980s, Shoreview was a high-growth community. The change in population from 1970 to 1986 averaged 5 percent per year. Rapid growth during these years provided substantial increases in revenues and helped the city achieve a reputation for quality community services and facilities. In recent years, population growth has slowed to an average of 1 percent per year. The slower, more predictable growth has caused the city to focus more on maintenance than on new facilities. Because it is nearing full development, Shoreview is placing more emphasis on planning for the replacement of existing infrastructure as a routine part of the city's financial planning.

Even though Shoreview offers a full range of services to its 25,000 citizens, its operating budget is just more than $10 million per year, and the general fund budget is less than $5 million. These budget levels result in low city taxes for citizens but put additional pressure on the community to plan ahead for needed improvements...