Glen, one approach that I can think of from my experience to responding to your question, is through a model that may help to guide the allocation to, and design of, elements you are addressing, is the following: In order to discipline the planning that local governments need to undertake, a model was developed to guide some of the issues that you have indicated. The virtue of this process is that it set the parameters of the program, make them public and adjust them as the process develops. I assume that the Municipal Development Funds are available to the local governments based on some established formula. I also assume that the local governments are tending to have more demand for services than resources would supply. These circumstances tend to allocate resources towards particular services that are not necessarily optimum benefits to communities over time. As a result, developing a model/models that examine the available income, or sources of income, (or other measureable benefits), demand, utilization and growth of the particular services, over 5, 10, 15 years versus the costs during those periods; and willingness of citizens to pay, where appropriate - has been a useful tool and strategy. Sometimes, the results of locally managed services are of particular interest to higher levels of government who may express willingness to support some of the costs to ensure these benefits. Important aspects of this strategy are transparency and periodic reviews, for obvious reasons. There are various ways of saying "transparency", as well. It also is beneficial to have both internal and public open meetings on plans and progress.
Hope this is useful,
Fitz.