Municipal Project Financing, Fees, and Rate Studies

Municipal infrastructure projects often hinge on sound financial planning and carefully structured funding strategies. HECO Engineers helps cities and towns develop and implement effective financing tools that ensure capital improvements are achievable, equitable, and sustainable. From development-related charges and rate analyses to public financing instruments like bonds and improvement districts, our team supports municipalities every step of the way. The following service areas reflect our core capabilities in municipal project financing and funding strategy:

Development of System Development Charges (SDCs)

System Development Charges (SDCs) are one-time fees assessed on new development to help fund the expansion of infrastructure capacity needed to serve that growth. HECO assists municipalities in developing SDC methodologies and ordinances that ensure growth pays for itself, reducing the financial burden on existing residents. Our team analyzes future infrastructure needs (for water, sewer, roads, parks, etc.) and calculates fair SDC rates so that new development contributes its proportionate share of capital improvement costs. In every SDC development project, we prioritize equity and compliance with state laws, creating a transparent fee structure that can withstand public scrutiny and legal requirements.

Water/Sewer Rate Studies

HECO provides comprehensive water and sewer rate studies to help cities set utility rates that are financially sustainable yet fair to customers. Because most municipal water and wastewater systems are primarily funded by user fees, periodic rate adjustments are inevitable to meet operational and capital needs. We analyze factors like operating costs, maintenance needs, debt service, and future capital improvements to project revenue requirements. Critically, we help municipalities avoid “rate shock” by planning incremental rate increases rather than deferring adjustments. Our rate studies typically include comparisons with similar communities and evaluation of rate structures (e.g. base charges vs. usage tiers) to ensure affordability and fairness. The result is a data-driven rate strategy and implementation schedule that balances the utility’s financial health with the community’s ability to pay, allowing city officials to confidently explain and justify the needed rate changes to their citizens.

Forensic Structural Engineering and Damage Assessements

Local Improvement Districts (LIDs)

Local Improvement Districts (LIDs) are a specialized financing tool that cities and counties can use to fund infrastructure projects benefitting a specific area. In an LID, the local government issues debt (bonds or loans) to build the improvement, and the benefited property owners pay back the cost over time through special assessments. HECO assists municipalities in evaluating and forming LIDs for projects like street improvements, utility extensions, or sidewalk installations that primarily benefit a particular neighborhood or district. We help identify the improvement boundaries, estimate project costs, and determine a fair assessment method so that each property is assessed in proportion to the benefit received. Our engineers work closely with city administrators, bond counsel, and affected property owners through the required petition and public hearing process to ensure community support. LIDs can be an effective way to leverage local dollars, particularly when matching funds are required for state or federal grants.

Bonds, Loans, and Judicial Confirmation

Capital improvement projects often require financial resources beyond the scope of a city’s operating budget. HECO Engineers supports municipalities in identifying, structuring, and securing project financing through bonds, low-interest loans, or other borrowing instruments. Our services include preparing cost-benefit analyses, advising on bond structures, and supporting legal documentation processes to ensure our clients can move forward with confidence. When voter-approved bonds are not feasible, HECO assists municipalities in pursuing judicial confirmation as a viable alternative. This legal process allows cities to demonstrate the necessity of a project before a judge in order to authorize debt without a public vote. We have guided communities through this process to help them move critical infrastructure projects forward when timing and urgency are paramount.

Impact Fee Analysis

Impact fees are a key tool for ensuring that new development contributes its fair share toward public infrastructure needs. HECO provides municipalities with complete impact fee studies that align with state statutes, local goals, and community expectations. We help quantify the capital improvements necessary to maintain service levels and allocate those costs proportionately to future growth.

Our impact fee services include the preparation of Capital Improvement Plans, cost estimates, allocation methodologies, and facilitation of advisory committees or public work sessions as required by state law. By helping cities implement impact fees correctly, HECO enables communities to fund parks, utilities, transportation infrastructure, and public safety improvements without placing undue strain on existing residents.

Funding and Bonding of Projects

Even with careful planning of rates, fees, and local contributions, most large infrastructure projects require a creative mix of funding sources. HECO Engineers provides end-to-end assistance in assembling and executing funding strategies to turn municipal projects from plans into reality. We understand how to layer various financing mechanisms – from grants and low-interest loans to bonds and local assessments – to maximize a city’s resources. Below are key areas in which we support municipalities in funding and bonding of projects:

Federal and State Grant/Loan Program Assistance:

We help identify and secure grants and favorable loans from agencies and programs available to Idaho and Oregon municipalities. Our team prepares grant applications, feasibility studies, and cost-benefit justifications that align with funding program criteria, greatly improving the chances of award.

Local Improvement Districts (LIDs):

Our role in funding projects via LIDs includes determining the feasibility and assessment roll, coordinating with financial advisors, and guiding the city through public outreach and legal formation. By implementing an LID, municipalities can tackle improvements that directly benefit certain neighborhoods without tapping general funds.

Judicial Confirmation Hearings:

We assist cities in pursuing judicial confirmation of debt when bonds cannot be approved at the ballot box. HECO provides the technical documentation and expert testimony to support the city’s case before a district judge. This ensures essential infrastructure projects can proceed when other financing paths are unavailable.

Bonding/City Loans:

We guide municipalities through issuing bonds or securing city-to-city or state-sponsored loans. This includes evaluating bond types, assisting with financial analyses, and helping structure debt in a way that fits the city’s legal and fiscal constraints.

Bond Elections:

HECO supports municipalities in public outreach and education leading up to bond elections. We prepare easy-to-understand technical materials, attend public meetings, and equip officials with the resources they need to communicate with constituents. Whether a bond election succeeds or not, our involvement helps communities understand their options and plan next steps.

Public Involvement and Workshops:

We help municipalities engage residents through open houses, community meetings, and digital platforms to discuss upcoming projects and financial strategies. This transparency builds trust and ensures smoother implementation when rate increases, LIDs, or bond measures are proposed. HECO translates complex technical information into accessible messaging, helping the public understand the value and urgency of infrastructure investment.

HECO Engineers is a trusted partner in navigating the complex world of project financing and rate studies. From technical evaluations and public outreach to grant writing and legal financing mechanisms, we help municipalities fund the infrastructure that keeps their communities running and growing.

FAQ’s

What types of municipalities does HECO typically work with?

HECO Engineers serves a range of municipalities including cities, towns, utility districts, and counties—primarily in the Pacific Northwest. We frequently support rural and small communities that may not have in-house engineering or financial planning staff.

Can HECO help our city identify grant opportunities for infrastructure projects?

Yes. We regularly assist clients in identifying and applying for federal and state grant and loan programs. We can also support application development, funding strategy coordination, and post-award compliance.

How does judicial confirmation work, and when is it appropriate?

Judicial confirmation is a legal process that allows a municipality to obtain court approval for issuing debt without holding a public vote. It’s typically used when a project is urgent, required for health and safety, or when a bond election fails but the need remains.

How do we know if our current utility rates are financially sustainable?

HECO can perform a rate sufficiency review that examines your current revenue, operating expenses, reserves, and capital needs. If adjustments are needed, we can recommend changes that phase in over time to minimize customer impact.

Does HECO only provide engineering, or do you also assist with long-term utility planning?

We do both. While HECO is primarily an engineering firm, we offer financial and utility planning services that complement our technical work. This integrated approach ensures your infrastructure plans are both buildable and fundable.