Budget Manual 2020

Budget Manual

C. Capital Improvements Program The Capital Improvements Program, or CIP, is a financing and construction/acquisition plan for major capital projects that the City plans to undertake in the near future. The CIP specifies and describes the City's estimated capital project schedules and priorities for the ten years immediately following Council adoption. The CIP is updated annually and adopted by the City Council. Capital Improvements Projects Capital Improvements Program (CIP) projects consist of purchasing, constructing, or renovating structures and/or acquiring land, have a total cost of at least $100,000, and an estimated useful life of at least ten years. Common CIP projects include new or improved sidewalks, roads, neighborhood renewal projects, and new city facilities, such as recreation centers, fire stations, and water treatment facilities. For each capital project, the CIP includes a variety of information, including a project description, a proposed timetable, proposed funding levels and sources, and, if applicable, estimated ongoing operating costs and the development focus area(s) affected. For projects underway, the description also notes the portion of the pro- ject's budget remaining. CIP Preparation Along with their annual operating budget requests, City departments propose capital projects for consideration and inclusion in the CIP. These requests are reviewed by staff from the City Manager's Office and the Budget & Evaluation Department. A preliminary CIP is presented to the City Council as part of the annual budget review. The Preliminary CIP may also be presented to the Parks and Recreation Commission, or to other stakeholder groups. A Final CIP is presented to the City Council in June and adopted concurrently with the Annual Operating Budget. Relationship to the Annual Operating Budget Projects that are included in the CIP have various direct effects upon the City’s annual operating budget. Sometimes a CIP project is funded through annual operating funds, such as the General Fund and the Water and Sewer Operating Fund. In these cases, the CIP and the Annual Operating Budget are directly linked and CIP projects become authorized through the adoption of the Annual Operating Budget. For example, if Parks and Recreation requests and is approved for $100,000 to build a new park facility or structure, and the funding source is General Fund operating revenues (property taxes, sales taxes, etc.), the subsequent Annual Operating Budget would include an appropriation of $100,000 for the project. Many CIP projects require debt financing, by borrowing money from the sale of bonds, or other financing options, to fully fund a project that will be repaid in annual installments, usually over a twenty-year period. Once the bonds are sold, the principal and interest payments due on the bonds must be annually budgeted.

Capital Improvements Program C-1