Capital Improvement Program
What is a Capital Improvement Program?
A Capital Improvement Program (CIP) is a roadmap that provides
direction and guidance for the City of Mesa on carefully
planning and managing its capital and infrastructure assets.
Identifying capital projects and their anticipated funding
sources assists in the planning and scheduling of finances for
projects and the manpower needed to plan, design, and construct
The CIP promotes coordination of capital projects that are
from different program areas but are similar in scope or in the
same geographical area of improvement.
Examples of projects in Mesa's 5-Year CIP include street
construction, water treatment plants, wastewater facilities,
park improvements, libraries, mass transit, airport
improvements, gas lines, fire stations, police precincts, and
public building construction.
Land purchases are also listed in the 5-Year CIP since it is
considered a capital asset. These projects are long-term in
nature (over one year) to complete and are usually financed over
a period of time. Typically, a CIP project has a dollar amount
over $10,000. 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.
How are projects in the Capital Improvement Program
The 5-Year CIP is a format by which the City uses to review the
funding of desired capital improvements that compete for scarce
financial resources. Generally, there are two primary sources of
funding for capital improvements - revenues sources (various)
and the issuance of City bonds. Other sources such as State Aid
and Federal Aid may augment the funding for projects.
Revenue - Revenue sources range from general
and special revenue (sales and development taxes, Highway User
Revenue, State shared revenue, Federal and State grants, fines)
to enterprise revenue (electric, gas, water, solid waste, etc.).
Bonds - The issuance of City bonds is
another 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 throughout the nation. There
are three types of "bond" fund projects in the 2004-2009 CIP
book. They are listed below with their definitions:
General Obligation (G.O.) - General
obligation bonds are categorized into two groups. The two groups
- 20% - 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.
Utility Revenue Bonds - Utility
Revenue Bonds have no statutory limitations as to the amount of
which may be issued. Projects that fall into this category are
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.
Highway User Revenue Fund (HURF) Bonds -
HURF Bonds are bonds secured by revenues received from the State
of Arizona. These revenues are collected from vehicle taxes,
penalties, interests, and fees. Only street transportation
related activities and projects could utilize these types of