This paper describes the strategic financial planning process undertaken by the City of Salem, Oregon to support an estimated $1 billion (inflation-adjusted) in water-related (i.e., water, wastewater, and stormwater) infrastructure investment over the next 20 years. Understanding that the planned capital investments would place unprecedented financial pressures on the utility systems, the City embarked on a strategic financial planning process in 1998. This process followed four main tracks of analysis: 1) system development charges, 2) long-term financial planning, 3) cost of service analysis, and 4) public education and involvement.As a result of the process, the City has established a solid financial framework to move forward with its planned capital investments, in a manner consistent with community values and objectives. The City has also demonstrated to bond rating agencies and other stakeholders that it is committed to continuing to provide high quality infrastructure services at a fair and reasonable cost. The Salem model is a strong example of how to address the financing challenges that are common to many other utilities across the country today. KEY WORDSFinancial planning, rates, cost of service, system development charges.

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