Section I: 15 points. Answer one of the following two questions.
1) The Town of Banff, located in Banff National Park (2564 square miles) of Alberta Canada
has a population of 6,700 and is only 1.9 square miles. The Park is a major destination for
tourists from all over the world with its breathtaking views of the Canadian Rockies and
close access to the Park’s amenities. As only one of two towns in the park (which is adjacent
to Jasper National Park that is 4200 square miles), the town is a primary service center for
park visitors and home to many resorts, hotels, and other commercial enterprises that cater to
tourists. Although the town was established in 1880, recent growth and environmental
pressures have facilitated its relatively recent incorporation in 1990. The town has a
managerial form with 6 council members. The town has a long-range financial plan, an
operating budget, a capital budget, a capital plan, a community plan, and several
The town will undertake its most expensive and comprehensive capital project to replace all
public infrastructure for 8 blocks (approx. 1 mile) on its main street. This infrastructure to be
replaced includes the following: a 4 lane road, street lights, sidewalks, storm sewer, sanitary
sewer, water lines, and traffic signage. This road is the main thoroughfare through the town,
and so is well-traveled by thousands of tourists and residents during the summer.
Additionally, the majority of the non-resort commercial enterprises of the village are located
in this 8 block portion that includes restaurants, tourist shops, grocery stores, clothing and
jewelry stores, etc., so there is a great deal of foot traffic in this area during the day and well
into the night. (Keep in mind that, although small in terms of population, Banff’s population
density is high.)
As the municipal manager of this town, it is your responsibility to manage this project.
Explain the primary activities you must engage in to plan, finance, and implement the
project. Identify and describe the primary issues or problems you are likely to encounter
and the major decisions you (and your team) will make in planning, financing, and
implementing the project. The project must be completed in a short amount of time as
significant snowfall and freezing begins in early October and does not end until early-May.
Make sure you target your comments to this capital project specifically and not capital
projects in general.
2. The Village of Madison is a middle-ring suburb in a major metropolitan area. Its
boundary almost encompasses an unincorporated area of about .8 square miles. That
unincorporated area contains a large trailer park in the center (Section B), and some
undeveloped land further away from the city (Section C). That area has been used as a
dumping area, probably by the residents of the trailer park (who have to pay for garbage
pick-up from a private hauler) and nearby residents who want to dispose of large items
free of charge. The village provides most of the police and fire protection to the
unincorporated area through reciprocity with the county, which cannot respond as fast as
the village. Thus, much of the village’s services to this area are pro bono. Additionally,
there are concerns that the septic systems of the trailer park are not being maintained
appropriately by the trailer park owners, and are leaking pollutants into the village’s well
system. The trailer park currently has its own well, but water pressure and quality is
inadequate. The village is under a great deal of pressure from its citizens to annex the
area, eliminate the trailer park, and bring in more desirable development.
One of the primary concerns of the village is that developers may not be willing to
provide the necessary infrastructure to support the development. In addition to sanitary
sewers, the area will need water mains, road improvements on major streets, lighting,
signage, sidewalks, a retention pond to hold rainwater, and an improved drainage system
for storm water. Road improvements that link Sections B and C will require the village
to build a new bridge over a small river to meet load standards. Ultimately, the village
will also need a new fire station to service the entire area and nearby sections of the
village. (Given population growth on the border with the unincorporated area, the village
is close to requiring a new fire station currently.) The portion of the unincorporated area
that is closest to the village (Section A) comprises about ½of the unincorporated land
area. This section has the most miles of roads and commercial enterprises that provide
goods and services to the portion of the town that is closest to the total unincorporated
area and the trailer park.
Using the data in Attachment 2Fa (.pdf or .xlxs) and figure Attachment 2Fb, construct a
5 year capital budget that distributes the projects in a logical order over the 5 year time
period and meets revenue and debt constraints. The city plans on issuing $5 million in
debt for capital projects in the first year, and it can contribute an additional $2.5 million
in grants and own-source revenue in the first year. However, the city estimates that it can
contribute only $2 million each year after that (in years 2 – 5) from own-source revenues
and intergovernmental grants.
Make sure you explain your answer and budget figures.
Section II: 15 points. Answer one of the following two questions. Show your calculations
and explain your answers to obtain partial credit. Please put your excel file on Blackboard if you
3) The finance director has assigned you the task of doing an analysis of the water charges
the town issues to resident customers and other municipalities. The city owns and
operates 3 large wells from which it provides water to its own citizens and four smaller
surrounding communities. Water is sold to each of the surrounding communities as one
lump fee based on volume, but it is sold to its citizens based on metered use per
connection. Your task is to determine whether charges to the citizens and surrounding
communities are appropriate relative to usage and the operational and capital needs of the
water fund. Town officials recognize that the water sold to surrounding communities is
subsidizing the water used by its citizens, and many feel that this is appropriate to some
extent. However, nobody really knows the size of the subsidy because they don’t really
know how much it costs the city to produce a gallon of water. Currently, water charges
to citizens are based primarily on looking at what other communities are charging its
citizens, charging less than that amount to its own citizens, and then charging the
surrounding communities enough to make up the difference based on the percentage of
total gallons sold.
Using the figures in Attachment 3F (.pdf or .xlxs), do the following:
1) Using an average cost approach (not a marginal cost approach), determine how
much it costs the town to provide a gallon of water to citizens and surrounding
communities considering all direct, indirect, and depreciation expenses. Note that
the cost to citizens is different than the costs to surrounding communities. To
determine varied costs, consider that some expenses should not be borne by the
surrounding communities that purchase water.
2) Determine how much citizens and surrounding communities are currently being
charged for a gallon of water and what the charges should be if subsidization of
water service to citizens by surrounding communities were not occurring (using
an average cost approach).
3) Identify any other problems with the current water charges issued by the city, and
explain how you distribute administrative costs.
To answer this question correctly, you will need to distinguish direct from indirect costs
and distribute indirect costs in a reasonable way.
4) The costs of disposing of solid wastes has skyrocketed in the last 10 years due to limited
land fill space that has increased the need for recycling solid wastes. Currently the city
has a cart system in which all garbage (recyclable, and non-recyclable) is placed by
households into the same cart, which is disposed of by the city in the same refuse packing
truck. Garbage carts from single family and duplexes (two-family) households are
retrieved from their permanent storage location, usually the back of the house or
driveway, by the city worker and brought to the truck on the street. Condominiums,
apartment complexes, and private businesses use a dumpster system with separate
recyclable and non-recyclable bins and collection of this refuse is contracted out. The
city makes no attempts to sort or recycle the house and duplex garbage after it is
The city’s finance director has charged you with doing an assessment of the average costs
associated with three options for collecting house and duplex refuse. These options are
explained below, but you will need to make some assumptions to complete this question.
A) Contract out the entire system: private firms agree to use their trucks and
personnel to collect the garbage and sort it after collection. The city is responsible
for providing and replacing the garbage carts, but this option does not require new
carts or increasing the number of carts provided to each resident and duplex.
However, the contractors will not retrieve the carts from their permanent location,
so citizens must bring them to the curb for pick-up on designated days.
B) Purchase new carts and replace entire fleet of packing trucks with new model truck:
purchase an additional cart for each household to hold recyclable items, and require
residents to separate recyclable and non-recyclable refuse into the different carts.
Thus, each household will have two carts. This option also requires replacing the
existing fleet of packing trucks with new ones that empty recyclable and nonrecyclable
garbage into different collection containers on the same truck. This
system allows one truck to collect both types of garbage in the same run. These
new trucks fill up faster than the old trucks, so more new trucks must operate to
collect and dispose of the same amount of refuse in the same time frame. Carts are
retrieved from their permanent location by garbage workers.
C) Purchase new carts and run double pick-up: purchase an additional recycling cart
for each household similar to option 2. Rather than purchasing a different fleet of
packing trucks, this option requires the government to make two sets of refuse runs
each week on each household using current trucks. One run collects recyclables,
the other non-recyclables. This will require purchasing additional standard packing
trucks to handle additional runs and hiring additional personnel. The city will
require citizens to bring their refuse to the street (possibly on different days for
recyclable and non-recyclable) to increase the coverage rate (per house) for each
truck during a shift.
Using the figures in Attachment 4F (.pdf or .xlxs) do the following:
1) Determine how much each of these options will cost the city over the next 5 years.
Assume a 3% inflation rate and a 4% discount rate. (Assume that the 1st year is
year 0. Inflation and discount are not applied until year 1.)
2) Identify which option is the best from a financial perspective.
3) Identify and discuss any other financial and non-financial factors that should or
could be considered in choosing an option in this situation.
Section III, Question 5: 20 points. This question requires that you read the case on City
Council Hearings in Pine Ridge Arkansas in Attachment 5F.pdf Explain the politics associated
with these budgetary relationships, and how the problems identified in the case could be resolved
by answering the following questions.
A) Identify the players in this political situation and their stake in the current situation: what
are their priorities and likely political positions on the problems created by this situation
and appropriate solutions. (Please do not list the council members separately, but discuss
how they are likely to coalesce around particular types of solutions to the problem and
leverage the problems in similar ways.)
B) Based on what you know about the politics of revenues, balancing, and executing
budgets, identify the strategies that are being employed by the players and what strategies
they are likely to employ to close the deficit and resolve the PISD’s long-run and shortrun
problems (be mindful of the actors’ overall objectives).
C) Based on the principles and recommended practices you’ve learned in class and the
readings, what would be the appropriate or most desirable solutions to the problems
created by this situation, including policies and practices that the city should adopt to
resolve the immediate and long-term problems?
- Attachment 1
- Attachment 2
- Attachment 3
- Attachment 4
- Attachment 5
- Attachment 6
- Attachment 7
- Attachment 8