Preparing for the Future: 3 Ways to Mitigate Risks and Build a More Resilient Community

Every community wants to be resilient. Being able to withstand adversity and come back stronger is crucial to resident safety and satisfaction. 

However, more and more communities today are being devastated by adverse weather events, limited natural resources, and coastal erosion. These adversities can have a devastating impact on residents, infrastructure, and the financial position of the municipality.  

Government finance leaders can play a huge role in helping their community prepare, withstand and rebuild quickly. One way is by using the capital planning process to evaluate existing assets, not only for degradation and potential for replacement, but also for their impact on resiliency.

An article in Government Finance, “Planning for Uncertainty: Capital Planning as a Tool to Build Resilience for Your Community” lays out the importance of a capital plan in helping to be prepared: 

“A capital plan that accounts for the risks and opportunities associated with climate change can help create communities that are better prepared to guard against the many unknowns of environmental impacts, take advantage of opportunities, and provide more desirable communities, all while ensuring a fiscally sustainable future.” 

In fact, the capital plan may be the only place that a municipality can come together to discuss and plan for the viability and success of their community over the long-term. There is no one-size-fits-all solution as each area faces different risks, climate impacts and other factors. 

So how can you be prepared (from the financial viewpoint)?  

1. Know what you own

Having a clear understanding of the details of your assets, their replacement value, useful life, and current condition is critical for staying prepared. It might sound easy, but many communities have assets that are quickly deteriorating, new assets being installed, and other changes being made at a pace that outstrips their ability to keep track of it.

Having an accurate account of your assets makes it easier to file FEMA or insurance documentation to receive the correct financial payout. In 2021, Waco, TX city officials were able to work with their insurance company after a local middle school was destroyed in a fire. Using historical asset data, officials were able to secure an additional $8M in funding to rebuild the school. You can read the full story here.    

2. Keep up with current risks

The old risks are not the new risks. We are seeing new and more extreme weather; some communities are in danger of running out of water while others may face more floods. There are tornados and earthquakes happening in unexpected places. Hurricanes aren’t just coming earlier; they are stronger and more devastating than ever. By understanding the new risks, communities can plan to build, site, repair, and replace in more effective ways.

3. Detail the risks and actions in your capital plan

The clearer municipalities are in showing how they are addressing environmental and other risks; the more comfortable investors are when purchasing their bonds. “In particular, investors seek to match known climate risks with responses in the capital plan and to determine if appropriate actions are being taken to protect against future risks.”  This will keep the bond rating high and the interest rate on those bonds lower, freeing up capital. 

This is difficult work. Preparing for uncertainty is not a science. But even a little planning can go a long way when your community needs it most. Brightly has a framework to help Asset Investment Planning activities that can provide decision support in how to manage your public assets and enable stakeholders to “see” the impact of funding scenarios on the strength and sustainability of the community.

If you’re interested in reading more about how Brightly can help with your capital planning needs, read “5 Reasons to Use Asset Management to Drive Capital Plans”