Best planning and implementation toolbox

Capital Improvements Program:

Purpose of Tool:

Source: City of Palm Desert, California
A capital improvements program (CIP) is used by local governments to match their identified capital needs with their budget. The CIP provides a blueprint for local governments to fund their capital improvements in the most efficient and cost-effective manner. A well-prepared CIP keeps the local government from experiencing funding shortfalls, thereby protecting local citizens from unexpected tax increases or other changes in debt service requirements. Timeframes for CIPs vary; some jurisdictions prefer to plan for a shorter period of time, such as three (3) years, while others prepare CIPs for a longer timeframe (such as 6 or 10 years). CIPs are sometimes included as a component of the local comprehensive plan.

Benefits of Using Tool:
Local governments use a CIP as a guideline for capital spending, identifying prioritized needs within the budget and work program. In addition to providing a guideline for local government spending, the CIP allows local governments to track future needs and planned projects with the budget. Additionally, local jurisdictions with CIPs often increase their opportunities for receiving federal and state aid. The CIP process also requires careful and sound project planning through the review of their capital needs and funding programs each year.

Steps Involved to Use Tool:
Suggested procedures for establishing a CIP include the following:
  • Adopt a CIP bylaw, or formal policy, and appoint a committee to guide the capital improvement process and management.
  • Conduct an inventory of existing public facilities, such as roads and utilities, and document the facilities’ conditions (i.e. need for repair or replacement and scheduled date for any improvements).
  • Identify capital projects that are already underway, including the projects’ statuses, unspent funds, and whether additional funds are required.
  • Assess financial capacity, including recent and anticipated trends in revenue, expenditures, debt, and other liabilities.
  • Solicit each local government department for project requests. The appointed committee should determine total project costs, public acceptability, any legal requirements that must be met, and whether the projects advance the goals of the jurisdiction.
  • Hold community workshops or public meetings to obtain input from the public on capital needs.
  • Prioritize projects through a consistent set of criteria, ideally employing a scoring chart or other similar tool.
  • Develop plans for short- and long-term financing of CIP projects.
  • Draft a CIP and submit it to the governing board. Upon reviewing any comments or further edits, the governing board of the jurisdiction should adopt the CIP.
  • Monitor approved projects as they proceed, and update the CIP annually.

    Special Requirements to Use Tool:
    While CIPs are often developed for entire local jurisdictions, individual departments within the jurisdiction (such as water and sewer, transportation, etc.) may choose to develop specific CIPs. Requirements for individual departments to develop CIPs are at the discretion of the governing board of the local government.

    Specials Resources Needed to Use Tool:
    In order to most effectively complete a CIP, local governments should utilize personnel and/or local elected officials with the appropriate skill sets to evaluate the CIP process, balance the budget to meet/match community needs, and present the documents in a manner that is transparent both to decision-makers and to the general public. In addition, a jurisdiction may choose to use an interactive medium to present the CIP in an accessible and innovative manner, such as a website that links project details to a map of the area, which can also be used to track the progress of the CIP implementation.

    Communities / Agencies that Have Used Tool:
    Most local governments across the United States utilize CIPs in some form. The decision on whether to prepare a CIP, which is typically undertaken by larger jurisdictions, is left to the discretion of the individual government, not withstanding any state requirements.

    Colorado Springs, Colorado has established a five-year CIP that is updated annually. The CIP funds the city’s immediate capital needs, including: financial commitments, state and federal mandates, local grant match funds, infrastructure maintenance, public safety projects, bicycle and trail improvements, parks development and maintenance, repair, and other projects. In preparing the CIP, the city employed innovative methods to get input and buy-in from the public. The Spring Community Improvements Program (SCIP) was an award-winning program conducted in the late 1990s that allowed citizens to identify, review, and prioritize capital improvement needs. The final list of projects was presented to the Colorado Springs City Council and was adopted. All 34 of these projects are now complete.  Contact:

    Lisa M. Bigelow - Budget Director
    City of Colorado Springs
    budget@springsgov.com
    719-385-5554

    In Baltimore, Maryland the Planning Commission annually prepares a six-year CIP for the entire city. The Department of Planning receives the City’s budget and solicits capital requests from all City agencies. The Department of Planning then performs a detailed analysis of the requests and determines whether the proposed projects meet certain evaluation criteria, which include the Mayor’s stated goals for the City. Community input for the CIP is extracted from existing plans, such as the comprehensive plan and small area plans. For example, needs expressed or recommendations made in these plans may translate into specific capital improvement projects. Once a CIP has been drafted, the Department of Planning confers with the Budget Director’s office and the City Council. The City Council formally adopts the CIP.  Contact:

    Thomas J. Stosur - Acting Director
    Baltimore Department of Planning
    410-396-7526

    Metrics to Use to Monitor Tool Effectiveness:
    Municipalities with sound CIP planning generally follow conservative financial and debt management practices. These cities have greater opportunity to maintain a positive credit rating as determined by organizations such as Standard and Poor’s Corporation (S&P), Moody’s Investors Service and Fitch IBCA. In 2000, amidst economic hardships, the S&P upgraded Baltimore’s rating from “A” to “A+”, indicating the financial strength of the city. While the CIP is not the sole indicator of a city’s financial strength, it can greatly contribute to it. In addition, a municipality may determine whether it has produced a successful CIP through a variety of measures, including implementation of projects within the established timeframe, whether projects are completed at or under budget, and how the completed projects improve the overall quality of life for the community.

    List of Resources to Obtain Additional Info:
    References:
    - Developing a Capital Improvements Program – A Manual for Massachusetts Communities (PDF)
    - City of Colorado Springs – Capital Improvements Program (CIP): http://www.springsgov.com/SectionIndex.asp?SectionID=22 
    - City of Baltimore – Department of Planning – Capital Improvement Program (CIP): http://www.ci.baltimore.md.us/government/planning/cip.php