Capital improvements are public investments in physical infrastructure and equipment. Planning for capital improvements at the municipal level usually involves developing a capital improvement program (CIP). The University of North Carolina’s School of Government defines a CIP as a multi-year forecast of 1) major capital infrastructure, building, and equipment needs that a city or county faces; 2) the project appropriations or spending that are or will be incurred to make those needs a reality; 3) the sources of financing for the projects; and 4) the impact of the projects on future operating budgets. Depending on the location and governance structure, these programs can range in scope from annual plans to short-term or longer-range, 10+ year plans.
Why is this important to your community?
Aging infrastructure and increasing demand for public facilities and services, coupled with limited resources, will continue to present challenges to local governments as the population and employment in the CONNECT region continue to grow. Ensuring that the necessary infrastructure, public facilities, and equipment are provided to accommodate and support the projected population within the necessary timeframes and in the appropriate locations will remain an essential function of jurisdictions in the CONNECT region. A coordinated approach to planning these investments will allow communities to maintain the current levels of service and quality of life they enjoy while systematically developing the infrastructure needed to accommodate growth. A successful capital improvement program that anticipates current and future needs, supports projected land uses, transportation modes, and other community priorities, and identifies the appropriate resources for investing in necessary infrastructure will be uniquely positioned to realize the economic development and quality of life benefits.
According to a Lincoln Land Institute report, a coordinated and transparent approach to capital improvement programming provides an opportunity for local jurisdictions to make investment decisions that are based on community values and local comprehensive plans in addition to technical information and studies. This turns capital improvement planning and programming into strategic tools for implementing a community’s vision and goals, for land use, transportation, parks, and other vital community needs. In addition, within the CONNECT region, various infrastructure financing instruments—including Local Option Sales and Use Taxes, Education Capital Improvement Sales Tax, and the opportunity to develop an Impact Fee program—rely on local capital improvement programs to be implemented. (Note: Current laws do not allow for impact fees in North Carolina.)
What other tools are related?
- GIS Community Assessment
- Growth Management and Cooperation
How does it work?
The keys to getting the most out of any community’s GIS system is keeping data current, coding data consistently at the smallest level at which analysis is likely to be needed, and doing so with the help and advice of the agencies and organizations who regularly want to be part of a very robust planning process. Data that are only available at the county level are not very useful for community-level GIS assessments and analyses, but data at the census block or block-group level, or point data based on GPS coordinates or individual addresses (911 calls for service, for example) can be very valuable in terms of planning locations for community services, strategically siting mobile resources such as ambulances, or even planning for better food access in food deserts. A GIS Users’ Group may become the most important player in helping local officials make better, more strategic decisions about growth, infrastructure, and services, all aligned with community needs and priorities.
While GIS is frequently used for mapping existing data, its power lies in the ability to analyze and interpret information spatially. Examples of analyses that can be done using GIS include searching for information by location, identifying relationships and correlations between datasets through geographic overlays (e.g., which demographic groups are well served by facilities), analyzing changes over time (e.g., where building permits are issued), determining what features or services are proximate (e.g., police stations in relation to locations with high incidence of crime), assessing connectivity of networks and finding ideal routing (e.g., sidewalk connectivity), terrain and elevation analysis, and watershed and floodplain analysis. Maps made using GIS can be printed, distributed in static electronic format, or used interactively through GIS software or web viewers. Sharing data with other government entities, developers, and the public can lead to further uses and interpretations of existing data.
- Capital Planning, Budgeting, and Debt Financing, University of North Carolina, Chapel Hill School of Government 2007
- A Handbook for County Government in South Carolina
- User-friendly Capital Improvement Plan Tool for Water & Wastewater Utilities
- Capital Improvement Planning in Tulsa: APA Case Study
- APA Quicknotes: Capital Improvements Programming
- County and Municipal Government in North Carolina: Article 17 Capital Planning, Budgeting, and Debt Financing UNC Chapel Hill School of Government
- Capital Improvement Plans and Budgets: Lincoln Land Institute
Ready to get started?
Using the ToolA direct connection exists between a city or county’s growth, the comprehensive vision and plan for accommodating that growth, and the timing of capital investments to serve that growth. Best practices include an economic analysis of the fiscal impact of new investments that will support growth in accordance with the vision and plan, including the life cycle costs of maintaining and operating facilities or infrastructure. A community should have a set of adopted facilities standards and a comprehensive public facilities plan to guide the more short-term CIP.
- Define and classify capital expenditures. Decide what assets or properties are actually capital, and whether expenditures for them are appropriate to include in a capital budget.
- Identify capital needs. Develop a Capital Asset Management System that specifies needs for the renovation and replacement of existing infrastructure and capital assets, as well as a long term strategic plan to identify new capital facilities or technology that is necessary to meet or encourage new development in accordance with the vision and plan.
- Develop an approach to prioritize requests for capital improvements. This may involve evaluating potential improvements based on their urgency of need, legal mandates, or consistency with local and regional visions and plans.
- Draft a five to six year plan and schedule of major capital needs for approval, funding and implementation.
- Prepare an assessment and forecast of financial condition and ability to finance capital needs. Determine present financial conditions and project the resources that will be available to finance capital needs and budget requirements over the same capital improvement program period. This process includes a review of financial and debt ratios that bond rating agencies will use to assess local government ratings.
- Select financing sources for individual capital projects and expenditures. Identify financing opportunities such as bonds or other forms of debt, current revenues, capital reserves, impact fees or other charges to property and grants.
- Maintain or improve bond ratings. National and state bond rating agencies evaluate the debt of North and South Carolina counties and cities that issue debt. The ratings from these agencies affect the interest rates charged.
- Authorize capital projects and expenditures and appropriations of funds. Authorization and appropriation may occur together or separately as part of the annual budget ordinance or in other capital project ordinances.
- Obtain and manage financing for projects. Sell or place debt and obtain alternate capital and construction financing in compliance with federal regulations.
- Community Service Providers
- Economic Development Organizations
- Elected Officials
- Health Care Providers
- Landscape Architects, Planners, and Urban Designers
- MPOs, RPOs, and COGs
- Municipal Departments
Where has it worked?
About the Program
The city of Tulsa in northeastern Oklahoma recently undertook efforts to prioritize its infrastructure maintenance needs, establish a dialogue regarding fiscally sustainable infrastructure, and assess how the roles of the various stakeholders in the resource allocation process can help shape the physical environment. This was achieved by reworking the City’s existing investment strategy to prioritize projects under a consistent and clear set of goals, and more recently by focusing capital improvements on implementation strategies identified through the comprehensive plan. Recent projects identified through the Capital Improvement Program support the city’s commitment to revitalize its commercial corridors, expand transit opportunities, bicycle and pedestrian facilities in addition to a partnership with the Downtown Coordinating Council to develop a list of projects with a focus on investments in the Downtown.
In January 2008, the City’s staff began a review of the city’s capital project inventory and capital improvement project (CIP) development process. Concern that there was no clear policy and prioritization process with regards to unfunded needs grew after a project that was not on an official list was championed by the city council, and funds were sought for its implementation.
At the direction of the City’s Mayor, the staff developed a new CIP policy, project submittal process, and selection criteria to rank and prioritize the extensive backlog of existing projects. This process included documenting the submittal procedure and the decision points along the CIP approval through flow charts. The city also established a network based electronic submission process and a searchable database to update their previous outdated paper file system, in which the only way to determine if a specific project had a supporting CIP record was to conduct a manual search.
Why it works
The City focused on establishing measures to evaluate projects that represent both the expansion of existing capital facilities, as well as replacement and rehabilitation projects.
- Required justification from department head explaining the need for expansion
- Return on investment discussion (either a direct calculation, or clear statement of benefit)
- Review of potential co-location opportunities required with any proposed land acquisitions
- Evaluation of massing to identify opportunities for shared design and construction costs as well as the potential for an economic multiplier associated with infusing resources in a concentrated location
- Review of connection to the City’s established goals or “strategic initiatives” (Public Safety, Education, and Economic Development)
- Identify critical projects: public safety and maintaining structural integrity
- Identify projects that are integral to the City’s “core” service provision
- Identify projects with potential impact to the City’s operations
- Prioritize projects identified in adopted master plans
After adopting the criteria, it was determined that the majority of the city’s projects fell into lower priority categories due to their lack of connection to core services. In order to implement the plan and respond to the previous lack of adequate forum for discussing capital improvement priorities, the city established a CIP Review Team composed of the mayor, the city’s management team, and finance department staff.
- Community Service Providers