INFRASTRUCTURE

Strategy 2: Increase treatment capacity and extend infrastructure to desired growth areas.

Utility extensions can be incredibly costly and elected leaders may be hesitant to spend money on these projects without end users identified. As such, many communities prepare dedicated utility master plans for the various municipal utilities they provide. The master plan identifies both major and minor improvements including new treatment facilities as well as line extensions, lift stations, and pipe upsizing. The master plan contains cost estimates and timing for each of these projects. The projects from the plan are then incorporated into a capital improvements plan that is coordinated with municipalities’ annual budgets and growth and development goals.

Developer-driven improvements are those utility infrastructure improvements that are specifically tied to a proposed development project. In these cases, the developer is usually responsible for the cost of improvements. After installation, the improvements are dedicated to the municipality and they become responsible for operations and maintenance. However, in certain instances, a municipality may elect to extend infrastructure to certain sites as an economic development tool. This can be costly and therefore risky, but it may also help the municipality attract developers looking for “shovel-ready” sites.

Proactive Utility Extensions

Transportation and utility infrastructure are vital components of any new development. By strategically locating infrastructure investments and service extensions, a city can direct development to desired locations. Developers will be more likely to pursue opportunities at sites already served by municipal utilities and a robust transportation network, as opposed to paying for extensions to other sites.

IND15RPC region communities must balance existing system maintenance with the benefits of proactive utility extensions. This will be an important planning exercise for each municipality and will be dependent on their specific systems, condition, capacity, and long-range land use plans. When projects are deemed important enough, with substantial enough return on investment, these proactive projects should be identified in the comprehensive plan, economic development plans, and programmed into capital improvement plans.

Tax increment financing (TIF) is a financing mechanism that communities can use to pay for and install utility infrastructure in priority areas. TIF districts are typically established for high growth or priority growth/redevelopment areas such as a business park or downtown. TIF districts capture the additional tax revenue as a result of development, redevelopment, or increased property values. Those additional revenues must be re-invested within the TIF boundary. The City can extend utility services for a development project and then use the tax increment generated by that project to pay back the cost of the improvement over time.

Revolving Loan Fund

An infrastructure revolving loan fund is used to provide low-interest loans for infrastructure projects that facilitate economic development. They are most commonly used to fund water, sewer, and transportation infrastructure projects. Initial funding for the loan pool and operating expense may come from state or federal government agencies, non-profits, or private capital. After initial funding is acquired, loans are distributed. After those projects are constructed and start generating revenue, the loan is paid back into the pool for future projects.

Typical loan borrowers may include for-profit businesses, non-profit organizations, or local governments. Loan programs are often designed for businesses in target industries, specific geographic areas, and communities defined as distressed by certain criteria, or to target the needs of borrowers with items like micro-loans or gap financing. Revolving loan programs are also designed to finance development initiatives, such as infrastructure and revitalization projects sponsored by the local government or other entities.