A Capital Improvement Program (CIP) is a road map that provides direction and guidance for the City of Mesa. The road map helps City staff carefully plan and manage the purchase, construction, replacement, addition, or major repair of public facilities and major equipment.
Each department typically assigns one of their employees to monitor the details of department projects and coordinate with the City Engineering Department. Engineering assists departments with managing the bulk of CIP projects. CIP analysts from the Office of Management and Budget coordinate the funding for all CIP projects and assists departments in establishing their 5 and 8 year plans.
Knowing projects and funding sources in advance helps staff in the planning and scheduling of finances for projects and in allocating the manpower needed to plan, design, and construct the projects. The CIP also helps distribute costs more equitably, promotes efficiency through improved coordination between departments, and helps align projects with the City’s overarching goals.
On the CIP Interactive Map
CIP projects are long-term in nature and are usually financed over a period of time. Typically, a CIP project has a dollar amount over $10,000. Land purchases are also listed in the 5-Year CIP since they are considered capital assets.
Manila folders on the other hand would not be considered a CIP project because they are not very expensive and can be absorbed into a departments operating budget.
The CIP is the City’s best estimate for what and when projects will be completed—but it is important to remember that it is just a plan. The CIP can adjust to internal and external factors and thereby allow City leaders to make changes as conditions demand. It is not uncommon for a project timetable to be accelerated, delayed, or modified in scope even after it has been added to the CIP.
Many of the things you see each day in your community were once part of the CIP plan. The CIP includes street construction projects, water treatment plants, wastewater facilities, park improvements, libraries, mass transit, airport improvements, gas lines, fire stations, police precincts, and other public building construction projects.
There are two plans: a 5 year plan and an 8 year plan.
Generally, there are two primary sources of funding for capital improvements – City bonds and other revenue sources.
- The issuance of municipal bonds is a major source of funding for capital improvements. Issuing bonds is not only a common practice among cities, it is the primary and most widely accepted method of funding large capital projects for municipalities nation-wide.
- Other revenue sources range from general and special revenues (sales and development taxes, Highway User Revenue, State shared revenue, Federal and State grants, fines) to enterprise revenue (revenue from city services like electric, gas, water, solid waste, etc.).
Other sources, such as State aid and Federal aid, may also help fund projects.
If a project’s budget is too low to complete a project as it was originally designed, how does the City pay for it?
The City has several options when a project costs more than anticipated.
- Projects can be value engineered (reduced in scope)
- Money can be taken from other projects that have been delayed or canceled.
- Budget authority can be transferred from projects that were been completed under budget
- With approval, departments can use savings in their operating budgets to pay for projects.
- If there is no funding available from the options above, projects may be funded through the City's reserves with approval from the City Manager’s Office. Funding a project using the reserves is considered a last resort.
We don’t. Project costs are professional estimates until better figures are obtained when the City opens the project for bids from private contractors. Even after the City has accepted a bit, a host of factors can change before construction begins. These factors may result project cost estimates that are not exact.
The city currently utilizes three types of bonds:
- General Obligation Bonds
- Utility Revenue Bonds
- Highway User Revenue Fund (HURF) Bonds.
General obligation bonds are essentially loans that the City receives and guarantees to pay back. General obligation bonds are often considered a safe investment because cities can use their taxing power to repay the bonds.
Yes. There are two types of limits on borrowing:
- 20% G.O. Bond - Under Arizona law, cities can issue G.O. Bonds for purposes of water, wastewater, artificial light, open preserves, parks, playground, and recreational facilities up to an amount not exceeding 20% of assessed valuation, in this case, the secondary assessed valuation for Mesa.
- 6% - Under Arizona law, cities can issue G.O. Bonds for all purposes other than those listed above (definition of 20% G.O. Bond), up to an amount not exceeding six percent of assessed valuation, in this case, the secondary assessed valuation for Mesa.
In other words, if the assessed valuation of Mesa were 10 billion dollars, the City could borrow 2 billion for specific types of projects and 600 million on anything else the City needs.
Utility revenue bonds are loans for Gas, Water, Wastewater, and Electric projects. Bonds used for these projects are repaid from revenues received from the City's customers of that particular utility. The City can issue as much debt as necessary for these utility type projects.
HURF Bonds are collected by the State of Arizona from revenues received from vehicle taxes, penalties, interests, and fees.
Yes. The first year of the 5-Year CIP is referred to as the capital budget of a project while the remaining four years are referred to as the programmed amount for a project.