Five-Year CIP
A Primer for Government Entities
of All Sizes
What is a Capital Improvement
Program?
• A multi-year plan identifying capital
projects to be funded
• Identifies each proposed capital project to
be undertaken, the year in which it will be
started or acquired, the cost of the
proposed capital project, and the source of
funding for the project
• NOT A CAPITAL IMPROVEMENT
BUDGET
What is a Capital Improvement
Budget?
• The first year of a Capital Improvement
Program
• Your annual appropriation for capital
spending – legally adopted by your
governing body
• Authorizes specific projects and
appropriates specific funding for those
projects
Purpose of the 5-Year CIP
• Formalizes the what, where, when, and
how much of future capital projects
• Brings your long-range plan to life
• Method to communicate to your
community your capital priorities and plans
for implementation, including funding
requirements
Advantages of a 5-Year CIP
• Focuses attention on community goals,
needs, and financial capability
• Builds public consensus for projects and
improves community awareness
• Improves inter-/intra-governmental
cooperation and communication
• Avoids waste of resources
• Helps to ensure financial stability
Focuses Attention on Community
Goals, Needs, and Financial
Capability
• What services are most important to your
residents
• How much are they willing to pay for these
services
Builds Public Consensus for
Projects and Improves Community
Awareness
• Takes into account citizen input
• Helps citizens understand priorities and
needs for both popular and unpopular
capital projects
• Helps the community plan for the future
Improves Inter-/Intra-Governmental
Cooperation and Communication
• Coordination of projects that cross
municipal boundaries
• Allocation of resources to benefit multi-
municipal efforts (i.e. Councils of
Governments)
Avoids Waste of Resources
• No longer reinventing the wheel each year
when preparing capital budget
• Better scheduling of projects that may
share resources
• Avoid throwing money at a project now
when a long-term solution may be right
around the corner
• Encourages creative solutions
Helps to Ensure Financial Stability
• May justify an operating surplus in the
current year
• May justify a large current fund balance
• May justify a tax or fee increase or new tax
or fee in the current year
• May justify a tax or fee decrease in the
current year
• Allows for stability of tax rates
Steps in the Capital Improvement
Planning Process
1) Establish the Administrative Structure
2) Establish the Policy Framework
3) Develop Capital Project Evaluation
Criteria
4) Prepare Capital Needs Assessment
5) Identify Projects for Capital Program
6) Undertake Financial Capacity Analysis
Steps in the Capital Improvement
Planning Process (cont.)
7) Evaluate Funding Options
8) Evaluate and Program Capital Projects
9) Adopt Capital Program and Budget
10)Implement and Monitor Capital Budget
11)Evaluate CIP Process
Establish the Administrative
Structure
• Who will be involved in the process?
• What is considered to be a capital project?
• Develop deadlines for submission of items
to be considered
Establish the Policy Framework
• Programmatic policies – the long-range
capital and infrastructure needs, goals,
and priorities of the community
• Financial policies – Acceptable debt
levels; acceptable fund balance levels;
acceptable tax rates; who will pay for
these projects
Develop Capital Project Evaluation
Criteria
• Need versus Cost
• Criteria should be clearly defined and
agreed upon before the process continues
Prepare Capital Needs
Assessment
• Look at current capital inventory – useful
life and replacement cost
• Make repair or replace decisions
• Identify future needs – replacement;
expansion; new programs
Identify Projects for Capital
Program
• Review status of previously approved
projects
• Examine capital project alternatives
Undertake Financial Capacity
Analysis
• Look at 5-year operating projections
• Identify potential alternative sources of
funding (i.e. grants, developer
contributions, special assessments, public-
private partnerships, bond issue, etc.)
Evaluate Funding Options
• Are operating projections realistic?
• Do anticipated sources of funding fall
within Financial Policies defined earlier?
Evaluate and Program Capital
Projects
• Review requests from various
departments
• Prioritize
• Schedule based on needs versus funds
Adopt Capital Program and Budget
• Prepare the formal CIP document for
review and approval by legislative body
Implement and Monitor Capital
Budget
• Assign a project manager
• Monitor progress of projects and take
corrective action where necessary
• Monitor funding sources
Evaluate CIP Process
• Look for ways to improve
HAVE FUN!
EXCELLENT RESOURCE
• Capital Improvement Programming: A
Guide for Smaller Governments by
Patricia Tigue
• Published by and available through GFOA