In 1987, $105 billion in municipal bonds were issued to various public entities throughout the United States. Two years ago, that number jumped to an all-time high - $292 billion.

In 1986, there were 9.6 million financings and seven years later, the number doubled to 18.1, according to James Lahay, first vice president of Public Finance at Stifel, Nicolaus and Co., a national investment banking firm headquartered in St. Louis, Missouri.

As city governments struggle to maximize shrinking budgets to fit the ever-expanding needs of the community, municipalities are stepping back, assessing the public's needs and seeking ways to pay for those costs. According to Lahay, citizens are demanding more services for less tax dollar and many cities and towns are looking at the bond issue structure to meeting those demands.

Historically, bond issues were designed to financially keep pace with the expansive and often expensive needs of the community, such as establishing new programs and facilities or upgrading existing ones.

But before diving into building plans and new equipment, capital expenditures, and most importantly the voting booth, the first and most critical step is to establish a strategic planning framework. Correct and thorough development of the strategic approach can increase the chance of success.

The strategic planning approach can generally be organized into seven basic fundamentals. While these components are organized and discussed in a particular sequence, it is important to understand that they all are closely intertwined and generally overlap in sequence.

One of the main steps to a successful bond issue campaign begins well before the public opinion polls and renderings - establishing task forces and involving people of various ages, cultures and backgrounds within the community to participate in every phase- from concept to construction.

Determining what the public wants

According to Dr. Rod Wright, president of Attitude Research Company in St. Louis, Missouri, once these groups are energized it is important to begin assessing the general mood of the community.

"The first task that should be addressed is to determine what the voters are thinking by conducting public opinion surveys and public input sessions within the community," says Wright. "These surveys can be done informally by a task force of interested citizens or structured via a professional consultant."

Typical opinion poll questions often include: How do you feel about a tax increase to support this project? Would you vote "yes" if . . .? What types of financing would you be willing to support for this project? Where should the facility be located? How should users pay for the services offered?

"Some communities get caught up in what we call the "feel good" or "Santa Claus" survey that says, "Would you like to have a new recreation center?" And you'll always get back a response that will be an overwhelming "yes," which doesn't do you any good," says Ken Ballard, Principal for Ballard King and Associates, a recreation facility planning and operations consulting firm in Colorado. "You have to ask the right questions to get meaningful answers that are going to be workable.

"You need to know specifics. Would you support building a community recreation facility if it increased your taxes by this amount or if you use this form of financing? What if you had to pay daily admission fees or annual pass rates of this amount?"

Developing a Financing Approach and Plan

A financing plan must be established as soon as the results from the opinion polls are in. Financing ques-

Bonds Issued for Public Facilities

Source: Securities Data Company and The Bond Buyer, June 7,1995 (Numbers listed in the billions)

Long-term Bonds Issued Source: Same as above (Numbers listed in the billion)

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tions to answer at this stage include: What type of bond structure should be used? In how many years can it be repaid? Are the bonds rateable? What is the lowest possible cost of borrowing the money?

"There might be two or three different ways to finance the program. We identify all of the options and the pros and cons, or advantages and disadvantages of each one," says Lahay. "We then develop a preferred choice-A recommendation for proceeding. Not only the type of financing, but particularly what it involves, who it involves, when things are to be done - the whole financing plan. Throughout the process, we get input from appropriate people."

Seeking an Optimum Facility Program Mix

Another key ingredient in determining and building public support is developing an optimum facility program mix. A new service or facility should be tailored to the people who pay for it. Before discussing design plans and square footage, bond issue task forces and consultants should take note of what the community wants and needs in a recreational facility, while keeping in mind what services other communities offer and the current user demands unique to the service area. If the neighboring complex has an ice rink, think about offering a pool. If the local YMCA has a gymnasium, think about constructing tennis courts.

When voters approved an $8.8 million bond issue to build the new 62,000 square foot Recreational Complex in Webster Groves, Missouri, Mike Oppermann, the director of Parks and Recreation and Community Development, as well as other participants, "axed" the idea of cardiovascular rooms and free weights because a local YMCA had recently upgraded similar facilities. But because the demand for ice time in the region is high, they did, however, include an ice rink even though a nearby recreational complex also offered one. Also, the Webster facility features more than just sports, with meeting rooms, party rooms, a catering kitchen, concessions and staff offices.

A common mistake made by clients and consultants alike during this early time period is the urge to design the building and show renderings. This can be a deadly tactical error because the sell campaign can be half lost before it begins based upon the potential early bias of people without complete information. Instead, use a list of activities and a program mix to showcase a potential new facility rather than drawings.

Operations Planning . . . Understanding the "business" Aspects

A patterned shift has occurred over the last few years in community-based facilities. Since most communities are on tight budgets, new facilities and services are expected to do more than just service the community - they must make enough money to remain self-sufficient and operate at a profit just as a traditional business would. The public will be asking questions regarding an operations plan: When will the facility be able to generate revenues? How much will it take to start up the facility? How much will it cost to run the facility? What are the proposed fees for the users? Consultants and community task forces must be prepared to provide those answers.

Traditionally, many parks and recreational facilities have operated at a loss. The Webster Groves Complex has exceeded initial projections because of a carefully planned and varied optimum program mix complemented by a center designed for space efficiency.

Building a Project Cost Model

Early and definitive understanding of all potential project costs is crucial. The project cost model should be the budget "blueprint" and reference point for the project as it moves forward.

A common tactical error is evaluating only the construction costs rather than the entire cost of the project. This can cause significant embarrassment later in the project, even jeopardizing the project itself.

In addition to the typical construction costs, which includes construction labor and materials, furniture and equipment budgets must be established, down to and including maintenance items like vacuum cleaners and trash receptacles. Signage and artwork should also be considered at this early stage.

Other costs, known as the "soft costs" like architectural and engineering design fees, specialty consultant fees, permits, environmental remediation, surveys, and start up funds must also be built into the budget model.

Creating A Design and Construction Implementation Plan

Equally important - and integral with construction cost modeling - is an action plan that addresses the actual construction project delivery methodology and schedule requirements.

Historically, the design and construction process has taken the conventional design/build approach. This approach places the burden of management and risk solely on the owner and requires leadership and significant time commitment from the client.

However, the pressure to get facilities up and running, while working around various existing operations is becoming an every increasing challenge. Communities expect to see progress immediately. Options to consider may include fast tracking, where the project is rapidly moved forward by advancing design and construction activities in packages for delivery. This approach is frequently used in design/construction management and single source delivery systems.

The design/construction management approach is one which an owner selects a design organization and a construction management organization to work in tandem early in the process to assure compliance with budget, schedule and constructability. While this alternative eases the interaction between design and construction objectives at an earlier stage, it still requires significant owner leadership.

Relatively new to the industry at large and viewed as more innovative approaches are single source delivery methods such as total program management or design/build. These approaches offer a cohesive blend of design and construction with leadership and respon-

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sibility from one consulting source. These advanced delivery methods can significantly decrease the amount of staff time and commitment required by an owner and eliminate the "finger pointing" so often present.

In addition, the financial risk of developing and implementing a facility is also a growing concern for many clients. Single source delivery allows for "risk shifting." This technique puts the burden of cost overruns, schedule compliance, and quality squarely on the back of a single source delivery entity. The result is a guarantee of the cost, schedule and quality to the owner. This becomes important in communities where there has been a history of cost overruns, project schedule failures, and a general lack of credibility among the voters. This can often become a critical selling point in many communities.

While up to this point, efforts have been focused on developing the right "product" for the community, energies must now be shifted to concentrate on selling the product to the voters.

Creating the "Sell" Campaign and Getting the Vote

You and 10,000 residents may think that a recreational complex or other community facility project is a great idea, but there may be 20,000 other citizens who aren't yet sold. Since most bond issues require a vote and you want the majority of the voters to check the "yes" box, creating a targeted, thorough campaign is critical - and begins as soon as the idea is established.

"Years ago it used to be that if a school board voted to put something on the ballot, and if the leadership in the community was behind it, things passed fairly easily," says Wright. "But particularly in the last 10 years, with almost militant anti-tax sentiment in many communities, it has become increasingly difficult to pass these things."

"School districts that used to experience a lot of success are now having trouble getting anything passed. It has become increasingly important to get professional help in winning campaigns because there are proven methods that work."

Throughout the campaign, communications is the key. The message must be repetitive, persuasive and emotional while addressing a need or benefit. The second issue is to ask people to volunteer their time for the campaign.

"The people of Webster Groves, for example, when they passed the bond issue for the recreation complex, were very good at networking in the community," Wright says. "They started with some obvious constituent groups, sports leagues and swimming teams and people that had a direct vested interest in that facility, but then you layer out from that. Before long, you get a lot of people involved."

In summary, the key to a successful bond issue in your community is a well designed and comprehensive strategic planning framework that includes three key elements:

sufficient planning time;
the integration of all planning aspects - feasibility, funding, design and construction; and
community involvement and commitment.

The real measure of the bond issue's success - and the facility's success - is the benefit to the residents.

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