Infrastructure & Capital Projects Flashcards

A municipality issues revenue bonds for a water treatment plant. What is the primary security pledged to bondholders?

Answer: Net revenues generated by the water utility

Revenue bonds are secured solely by the revenues generated by the specific enterprise (e.g., water utility fees), not by the municipality's general taxing authority.

What is the purpose of a 'constructability review' in the pre-construction phase of a capital project?

Answer: To identify design elements that may be difficult, costly, or impossible to build as specified

A constructability review examines construction documents for buildability issues, conflicts, and ambiguities before bidding to reduce costly change orders during construction.

Which federal program provides low-interest loans to municipalities for water infrastructure projects, including drinking water and wastewater systems?

Answer: State Revolving Fund (SRF)

The Clean Water and Drinking Water State Revolving Fund programs provide low-interest loans to municipalities for eligible water infrastructure projects.

A city council member argues that a new fire station should be built using fund balance rather than bonds. What is the primary disadvantage of this approach for large capital projects?

Answer: It depletes reserves needed for emergencies and provides no intergenerational equity

Using fund balance depletes emergency reserves and requires current taxpayers to fully fund assets that future taxpayers will also use, violating the principle of intergenerational equity.

What is Earned Value Management (EVM) used to assess in capital project oversight?

Answer: Whether a project is on schedule and within budget by comparing planned value, earned value, and actual cost

EVM integrates scope, schedule, and cost to provide objective performance metrics, enabling early identification of cost and schedule variances.

Under ADA requirements, when a municipality repaves a street, what additional obligation is typically triggered?

Answer: Curb ramps and pedestrian access routes must be brought into compliance within the project area

When a municipality alters a street through repaving or reconstruction, it must simultaneously upgrade curb ramps and pedestrian facilities to current ADA standards within the project scope.

What distinguishes a capital expenditure from an operating expenditure in municipal accounting?

Answer: Capital expenditures create or extend assets beyond one fiscal year; operating expenditures are consumed within the budget year

Capital expenditures acquire, construct, or improve assets with useful lives exceeding one year, while operating expenditures are consumed within the current fiscal year.