Finding the Right Tools for the Job
Priorities depend on each city’s unique situation.
For example, some cities may not have the administrative capacity or bandwidth to handle implementation of a new funding source or financing tool, or have competing projects and priorities with greater importance. Those cities will prioritize administrative ease in selecting options. Others may be focused on increasing financial capacity, and be willing and able to invest in additional staff time and expense.
Developing Benchmark Criteria
Some factors may be threshold factors, where a low score would immediately eliminate an option from further analysis.
For example, most cities would reject an option with a known negative rating impact, because it would increase costs across their entire portfolio. Others factors may indicate the need for caution in investigating a particular source, but wouldn’t necessarily rule it out. For example, tax increment financing might score low on administrative ease and cost (because it requires establishing a new infrastructure financing district and administrative services that don’t exist) but score highly enough on other criteria to be considered.
Scoring Tools Against Criteria
For most of the factors, it doesn’t make sense to spend a great deal of time in the initial screen to develop precise revenue estimates or detailed analyses on the other factors.
Since the initial analysis is high level, to avoid false precision, these factors should be grouped at a high level, with qualitative rankings ( High, Medium, Low). San Francisco’s Seawall Finance Strategy Working Group took this approach, ranking options as high, medium, or low against the criteria it developed.
Rather than taking the time to establish formal criteria for each ranking, it may make the most sense to coordinate a discussion. For example, rather than having multiple criteria to determine whether an option ranks highly on administrative ease and cost, a group could just describe what would be involved and subjectively decide whether it’s “High, Medium, or Low.” Subsequent rounds after the initial screen can go into greater depth, as needed. Note that it helps to have all the rankings in the same (positive) direction, so a “High” score is always good. This means the factors all need to be framed positively—e.g., administrative ease, not difficulty, and Positive Incentive Effects, not incentives.
Establishing Core, Complementary, and Backup Sources
In city government finance, staff time is a limited resource.
Part of the prioritization goal is to make sure that time is spent chasing revenue sources with sufficient potential to pay off. Investing significant staff time in exploring an option that’s administratively difficult and has low revenue potential may not make sense. Conversely, if trying to secure a revenue option seems relatively simple, it may be worth pursuing even if it’s a low dollar amount.
A “heat map” with color-coding for high, medium, and low scoring can identify which options have the greatest potential. A robust strategy can establish a “core” set of options that the city would definitely pursue, complementary sources that a city will continue to investigate, and other sources that remain possibilities but that will not be actively pursued. This will allow substitution of option as conditions change, and will also allow planners to explain the status of each option to stakeholders.
Illustration of tradeoffs between staff time required to investigate and/or secure a revenue/finance option and the revenue potential or financial capacity of an option.
Funding Strategies Heat Map