Agenda - 02-23-1979 - Laserfiche WebLink

Browse Search

THE CAPITAL IMPROVEMENTS PROGRAM Definition. A Capital Improvements Program (CIP) is a list of capital projects, or outlays, which a locality plans to make within a five or six-year period. The intent of such a program is to identify and rank capital expenditures for several years in an effort to provide for orderly replacement and development of facilities. Such a plan identifies projects, their costs and priorities, as well as means of financing and estimated operating expenditures. The CIP form itself divides each project into elements (e.g., planning and design, land acquisition, construction, etc.); and, distinguishes among different time periods (prior years' expenditures, current expenditures, and planning years one, two, three, etc.). See charts 1 and 2. Capital Projects. Factors which distinguish capital projects from operating expenditures, thus necessitating special budgeting and planning procedures, include the following: --the magnitude of the expenditure, which often requires special funding methods. --the fact that the effects of such projects usually extend far into the future. --the need to delineate between capital items, with both present and future benefits, and operating expenditures. --the fact that capital projects are frequently passed to following governing boards. Criteria for Determining Capital Projects. In sum, the four generally accepted criteria used to identify capital expenditures include: 1. Durability. The project is expected to yield benefits for several years. 2. Non-recurrence, or irregularity, of the expenditure. 3. Relatively large expense. 4. Acquisition of a fixed asset, in most cases. Funding Sources. Sources of financing capital projects consist of one or more of the following: local current revenues, bond financing, federal and state aid, capital reserves, benefit assessments, subdivision regulations, and lease- purchase agreements. Process. The CIP process is comprised of three stages. 1. Planning: Formulation of the CIP and revenue projections. 2. Budgeting: Project evaluation, financing, and authorization. 3. Implementation. Ir Priority Ranking. In developing a CIP, it is frequently necessary to rank order requests. While various cost/benefit analyses may be used to arrive at priority ranking, one generally accepted ranking scale is shown below. 1. Urgently needed for safety of persons and property. 2. Renovation or addition to improve an existing facility. 3. New facility to relieve existing, undesirable situation. 4. New facility to handle workload expansion in existing program. 5. New facility for new program or service.