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Office of the Chief Financial Officer Long-Range Capital Financial Plan Report

District of Columbia: Briefing Summary of the
Long-Range Capital Financial Plan Report

Background 
The Office of the Chief Financial Officer (OCFO) has released the 2022 Long-Range Capital Financial Plan Report. The report looks at current assets, their condition, future capital needs, and funding availability to develop a long-range plan to address all identified capital needs of the District in the shortest possible time.

The District’s asset management system, the Capital Asset Replacement Scheduling System (CARSS), contains a detailed inventory of all District-owned assets, including land, buildings, roads and streets, vehicles, and equipment. This system provides the basis for developing the District’s capital improvement plan as part of the annual budget process and determining the cost of deferred maintenance for current assets.

The District is now generally recognized as having the most complete capital asset management system of any state or local government in the country. This system has been noted by the bond rating agencies as a key factor in the maintenance of the District’s high bond ratings, including a “Aaa” rating from Moody’s.
 
Key Highlights include:
  • $14.47 billion of total capital needs identified; approximately $10.93 billion of those needs are funded in the FY 2023 - 2028 CIP.
  • $3.54 billion of unfunded capital needs remain during the 6-year CIP period, down from $4.54 billion last year, of which approximately $1.45 billion is deferred maintenance.
  • Reasons for the decrease in unmet capital needs include the District's strong economic recovery, as well as the receipt of significant federal funds, which allowed for an increase in the size of the capital budget.
  • Analysis shows that unmet capital needs can be funded as early as FY 2032, if no additional capital projects are added before addressing currently identified unmet needs. This can be accomplished if the District commits roughly 16% of its general fund budget to capital projects (12% to support debt service on borrowings and an average of approximately 4% on pay-as-you-go cash funding). However, if additional capital projects are added before addressing current unmet needs, the timeline to catch up with unmet needs could be extended significantly.
  • The District has a comparatively lower cost of borrowing compared to its peers due to strong bond ratings: Aaa/AA+/AA+ by Moody's, S&P and Fitch, respectively. However, rising interest rates, due to macroeconomic factors, could impact future borrowing capacity.
  • Challenges to executing this plan include an uncertain economic outlook in the short- to medium-term, persistently high inflation, increased borrowing costs due to rising interest rates, supply chain disruptions, labor market shortages, geopolitical risks, amongst others.
  • The nation's capital is in an enviable position compared to its peers to navigate these challenges and address its infrastructure needs due to prudent financial management policies (including very strong reserves and fully funded pension and OPEB liabilities), a state-of-the-art asset management system, and a resilient local economy.

To the view the full report, click here. The report can also be found at www.DCbonds.com.

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