Jim Proce, adjunct instructor, for the Certified Public Manager Program at Texas State University (NCTCOG-Arlington TX) brings this real-life module to the classroom workshop setting. With a little help from Jim Nichols, PE, ICMA-CM, the content covers CIP back-hoes to budgets and everything in between. This has been presented in several venues, agencies, and professional associations and serves as a primer and checklist for all things CIP. For more information contact jimproce@gmail.com

1. Capital Improvement Planning
Developing a Process for a Community Investment Program
Rebuilding
Infrastructure
One Step at a
Time!
Looking to
the future!
Jim Proce ICMA-CM, APWA-PWLF, MBA
Proce Municipal Management Services
1

2. Why are you here today?
What would you like to talk about today?
What is your involvement in your organization
with regard to Capital Programs?
Do you know your City’s programs, processes,
or values?
What questions do you have?
2

3. Objectives
Implement successful
capital programs in
your communities
Navigate the political
hurdles and obstacles
often associated with
Capital Improvement
Planning
Draft and implement a
Capital Improvement
plan for your
community that will
be sustainable
through changes in
leadership
Understand all of the
moving parts
recognizing that this is
a team effort with
varying complexities
3

4. CIP Presentation Agenda
Background on CIP
Noting Typical
Issues
Define CIP in Terms
that are Finite
Discuss the Benefits
of a CIP Planning
Process
Identify the Many
Elements Required
for a Successful CIP
Organizing the
Stakeholder's,
Committees and
City Council Support
Discuss
Infrastructure
Inventory Assets
and Identify Needs
Preparing Financial
Forecasts, Bond
Elections and
Project Estimates
Compile Project
Requests and
Develop Criteria for
Ranking Projects
Drafting the CIP
Documents; Which
are Living
Documents
Identify & Discuss
Various Public
Outreach Methods
Program
Implementation,
Financing and Other
Considerations
So What Else is
There? You May
Have Others?
4

6. 2006 Bond
Election
and
Subsequent
Bond Sale
6

7. 2006 Bond Election and
Subsequent Bond Sale
On 5-13-06, City held a bond
election for 4 projects totaling
$31.5M
Every item on the list failed
46 days later, on June 27, 2006,
the City issued $38.3M in
certificates of obligation, and over
a 3 year period issued $107M
The Bonds issued were not for
those projects on the May ballot;
however, many residents believed
they were and were absolutely
incensed
Many residents felt
disenfranchised by that election
and hold residual resentment with
the City
This history comes up every time
debt is considered
7

8. City still had $100M as the bond programs were just getting kicked
off
New Council significantly reallocated the dollars to other priorities
Seriously? Can Council reallocate dollars from past bond sales to
new projects?
Yes. If you issue debt other than general obligation bonds, you may
not have the same level of commitment
In 2011 there was still $50M and no CIP
New Council Elected in 2007

9. 9
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
City of Rowlett
Debt Service Schedule-Existing @ 12-31-13
Tax Rate Golf Refuse Drainage New
City can use future freed-up
tax rate to build a leveraged
bond program

10. Background (General)
Local governments often make significant
capital expenditures including the issuing
bonds
Without first analyzing the impact such
expenditures may have on future operations
and expenditures for other important capital
projects

11. Background (General)
A capital plan is intended to assist
in making choices
Which projects should be
implemented, how they should be
financed and when

12. CIP Defined
Capital planning and budgeting is a complex process
characterized by uncertain long term projections,
political pressures, shortage of resources, demands on a
wide range of expertise that requires both operational
and financial know how
Capital funds are: always limited, and the future is
never certain.
Structuring a balanced capital plan requires
coordination of information, analysis of alternatives,
and building consensus.
Capital Projects are often categorized by projects/items
with a cost of $XX dollars, have a lifespan of XX years or
greater, and result in a long-term asset, typically
buildings, infrastructure, and major equipment.
12

13. CIP
Benefits
Allows for a systematic evaluation of all potential projects
at the same time.
Provides ability to stabilize debt and consolidate projects to
reduce borrowing costs.
Serves as a public relations and economic development
tool.
Focus on preserving infrastructure while ensuring the
efficient use of public funds.
An opportunity to foster cooperation among departments
and an ability to inform other units of government of the
entity's priorities.
It is not uncommon for a neighboring city to incorporate
into its CIP the capital needs of a special district, parks and
recreation department, or some other partnership.
13

14. CIP
Benefits
Terminates the ad hoc policy of allocating resources
to capital projects without regard to long-term
impact on the government's available reserves and
resources.
Assures that the most important projects obtain
funding.
Integrates budgeting for day-to-day services and
activities with budgeting for capital improvements.
This insures that construction, acquisition, and
operational needs are addressed.
Assures that the most appropriate method of
funding is selected (e.g. pay-as-you go or bonds.
Also insures that when bonds are used the most
appropriate type is selected.)
Improves project planning and timing sequence.
(e.g. Allows sufficient time to arrange and promote
bond or tax referenda. Allows sufficient time to
accumulate cash for pay-as-you go projects.)
14

15. Important Elements of a CIP
1
Projects and
their phases -
Design,
construction,
ROW
purchase, etc
2
Project
budgets
3
Funding
sources -
Bonds, grants,
general fund,
etc.
4
Assigned
resources -
Engineer,
project
manager,
inspector, etc.
5
Project
coordination
and
sequencing
6
Project and
expenditure
timelines
7
Financial
Impacts -
Operational,
implementatio
n (construction
management),
staffing
8
INTEGRITY

16. Stakeholders and more…
Identify
stakeholders
•Citizens
•Departments
•Public Works staff
•Management
•Council liaison
•Committees
•Boards and
Commissions
•Other partners
Establish public
process
•Solicit public input
•Achieve public
support
•Establish task force
•Transparent
process
Task
Force/Committee
•CIP is a
“Community
Investment
Program”
•Education process
•Specific duration
•Specific focus
•Provides
recommendation
Establish internal
CIP committee
•Establish duties of
committee
•Refine tracking
process
•Establish/improve
weekly updates
•Improve the
schedules &
estimates

17. CIP Task Force/Committee
Citizens
Diversity
Council input/approval
Ground rules/agenda/minutes
Alignment
Naysayers
Education/choices
Transparency

18. Internal CIP Committee Duties
Establish a Capital
Planning
Committee/Task
Force
Take Inventory of
Existing Capital
Assets
Evaluate Previously
Approved,
Unimplemented or
Incomplete Projects
Assess Financial
Capacity
Solicit, Compile, and
Evaluate New
Project Requests
Prioritize Projects
Develop a Financing
Plan
Adopt a Capital
Improvements
Program
Monitor and
Manage Approved
Projects within the
CIP
Update
Existing/Ongoing
Capital Programs

19. Two+ Year Bond Election Calendar
24-36 months out
Start talking about it during budget
process and Council retreats
TEST THE WATERS
24 months out
- Engage Council on policy issues
- Decide process to get citizen input
on capital needs
12-24 months out
- Educate on Council financial
projections
- Present strategic decisions
- Identify conceptual needs
- Create ad-hoc citizen committee
18 months out
- Develop citizen input
- Develop education and media
plan
- Choose and design input methods
12 months out
- Finalize conceptual list ready for
committee and citizen input
- Conduct physical tours where
possible
8-10 months out
- Educate on public needs
- Seek citizen input and educate
public on needs
8 months out
- Conduct citizen input
- Execute chosen survey methods
5-6 months out
- Finalize and adopt list of projects
and ballot structure
3-4 Months Out
- Call ballot
- DETERMINE THESE DATES WELL IN
ADVANCE!
2 months out
- Continue to educate on issues
- NEVER STOP TALKING!
Election Day
Get ready to implement!
A successful bond
election/referendum takes
time! 19

20. Utilize exist
knowledge base
Survey staff for
inputs on needs
Utilize GIS hot
spot identification
Utilize citizen
contact data
Review existing
master plans
Review existing CIP
Solicit public
input through
task force and
other media
available
Inventory Assets & Identify Needs
20
Utilize exist
knowledge base
Survey staff for
inputs on needs
Utilize GIS hot
spot identification
Utilize citizen
contact data
Review existing
master plans
Review existing CIP
Solicit public
input through
task force and
other media
available

21. Project Needs
Utilities
• AC lines
replacements
• Clay tile line
replacements
• Lift stations
• Manholes
• Pressure plane
• Force main
under lake
• Looping systems
• Fiber-optic
network
Streets
• Alleys
• Subdivisions
• Sidewalks
• Trails
• Thoroughfares
• Traffic
improvements
• Traffic signals
• Stormwater
• Bridges
• Integrated
Transportation
Systems
Equipment &
Software
• Replacement
analysis
• Additional
equipment
• Technology
needs
• GIS integration
• HRIS
• Fleet
• Fire apparatus
• Fiber-optic
network lines
Future facilities
needs
• Future locations
• Storage needs
• Inventory
analysis
• Integration of
divisions
• Current space
allocation
• Parks/open
space
• Fire facilities
• Training facilities
FAILING INFRASTRUCTURE & FUTURE NEEDS
21

22. 22
Where is all
that stuff?
Providing all of the key
stakeholder’s a physical
tour of the all of
infrastructure is a key
investment of your time
and efforts to ensure that
they see and experience
what the residents
experience each and
every day!

23. 2015 Project Needs
The initial round of evaluations yielded 55 projects
The total of these projects was over $117 Million
In addition to the identified projects to be reviewed the staff identified:
• $27M in alleys
• $45M in roads
• $42M in drainage projects
• $12M in parks projects
• $9M in public safety projects
• $20M in public facilities
The target for this initiative was $25M - $27M through potential bond
Obviously the needs far outweigh the resources
TODAY THE NUMBERS ARE YET EVEN BIGGER!
23
Total of $155 Million Unfunded Projects

24. Community Investment Advisory Board
(CIAB)
Title Amount
Roads $TBD
Alleys TBD
Parks TBD
Facilities TBD
Total Amount Requested AS MUCH AS $250,000,000
The duties and responsibilities of the Community Investment
Advisory Board include:
• Providing recommendations to City Council on capital project priorities and project
selection;
• Providing guidance on strategic recommendations to the City Council with regard to
capital projects;
• Providing recommendations to City Council on guiding values for planning of capital
projects;
• Acts as an oversight committee and liaison to City Council regarding capital projects
• Represents the City at public meetings and public outreach campaigns on the subject
of capital projects.
As much as $250M in needs may be identified – the current debt
capacity without a tax increase can yield $75M proceeds – BUT it
would take over 30 cents on the current tax rate to bond $250M!
The CIAB has identified, reviewed,
prioritized projects for:
• Potential 2018 Bond Election
• CIP Recommendations (5 year
planning process)
• Budget planning
The CIAB has established:
• Prioritization and ranking
process for projects
• Reporting processes for
projects
• Targets: $60M in 2018
2018?
24

25. 2018 Bond Election Projections
25

26. 26
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
City of Rowlett
Debt Service Schedule-Existing @ 12-31-13
Tax Rate Golf Refuse Drainage New
City can use future freed-up
tax rate to build a leveraged
bond program

27. $0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
City of Rowlett
Current Tax Related Debt Service and Future Bonding Capacity
Current Tax Supported Debt New Issue Series 2017
Future Capacity Growth Capacity
CIP Bonding Capacity
Additional tax value
from future
development also
adds capacity in
future years.
Together, this means
that Rowlett has the
ability to seriously
address
infrastructure and
facility needs in the
future while keeping
the tax rate steady at
22.6 cents.
From Declining Debt
From Future Growth

28. $0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
City of Rowlett
Hypothetical Leveraged Bond Packages
Current Tax Supported Debt New Issue Series 2017 New¹ New² New³ New⁴
Leveraged Bond Packages
The City could
best leverage
the freed up
bond capacity in
a series of bond
packages.
Targeting off
election years
2018, 2021, etc.
28

29. Community Values –
Setting CIP Priorities
1. CORE BUSINESS FUNCTIONS
SUPPORTS FOUNDATION PROGRAMS
NO CHOICE - LEGALLY BOUND - MUST DO
2. CORE BUSINESS FUNCTIONS
CHOICES IN LEVELS OF SERVICES DELIVERY
SUPPORTS PROACTIVE PROGRAMS
HIGH EXPECTATIONS FOR SERVICE DELIVERY
3. QUALITY OF LIFE ISSUES
SOME COMMUNITY CHOICES
4. COMMUNITY
ADD-ON PROGRAMS
THINGS WE LIKE TO DO!
Community
Expectations & Values
defines what service is
and what the level of
that service is for our
City!
4. Equipment Supporting
Community Events,
Landscaping & Irrigation
Environmental
3. Libraries, Recreation,
Parks, Playgrounds, Open
Space
2. Public Safety
Equipment,
Infrastructure, Solid
Waste
1. Mandates, Debt
Service, Water & Sewer

30. (On-Going)
Strategy for Success
GOALS
2015 $27 Million
2018 $60 Million
3 Year
Implementation
and Project
Delivery
NO TAX
INCREASE
FOUNDATION
Financial
Stewardship
Sound Planning
Citizen
Engagement
Communications
Community
Goodwill
Balanced
Priorities
Innovative
Solutions
Leveraging
Opportunities
Results Oriented
Accountability to
the Community
PRIORITIES
Transportation &
Circulation
Public Safety
Existing
Infrastructure
Revitalization &
Balanced Growth
Quality of Life
Regulatory
Compliance
External Funding
Impact on
Operational
Budget
Timing/Location
Special
Considerations
2015RESULTS
Proposition 1 –
Streets - $18.9
Million
Proposition 2 –
Parks - $4.2
Million
Proposition 3 –
Public Safety &
Facilities - $2.6
Million
The May 5, 2018
election passed using
the same strategies
which yielded $60M
for public
improvements!

31. Establish Ranking Criteria
Criteria must be
established which will be
used as a guideline for
prioritizing project
funding.
The criteria should be put
in writing and distributed
to each party involved in
the capital planning
process.
The criteria established
should facilitate ranking
projects on a scaled
priority basis with a
strategic overview, based
on core service needs vs.
quality of life issues.
31

32. Establish
Ranking
Criteria
•Required by law or specific court order
•Required by contract
•Improve public health and safety
•Reduce current operating, maintenance or contractual expenses
•Increase revenues
•Contribute to job retention
•Benefit all or a majority of the residents
•Leverage other people’s money
High priority projects may be those which are
•Prevent deterioration of assets
•Improve delivery of services to the public
•Contribute to job creation
•Project readiness
•Public benefit
•Operational benefit
•May be non-essential but have a high degree of public support
Medium priority projects may include those which
•Support delivery of a service for which there is a declining demand
•Enable the provision of a new service not currently provided
•Improve the quality of life but are non-essential
•Unique facilities
•Community add-ons
•Not a core service
Low priority projects may include those which

33. Weighted Ranking Criteria
• Select & define criteria
• Simple weighting (% of whole)
• Scoring scale (1 to 10) (or whatever scoring you choose)
33
CRITERIA % Score
(1 – 10)
Points
Quality of Life 20% 7 1.40
Infrastructure 15% 8 1.20
Economic Development 15% 7 1.05
Health & Public Safety 15% 6 0.90
Impact on Operational Budget 10% 5 0.50
Regulatory Compliance 10% 6 0.60
Timing & Location 10% 7 0.70
Special Considerations 5% 5 0.25
TOTAL PROJECT SCORE 6.60

34. So what
did we
do?
34

35. Projects
Requests
WHERE DO THEY ALL COME FROM???
Staff, Citizens, Council, Master Plans, Comp Plans, Other
Departments, other sources…
Involves the preparation of forms to request capital funding for
the repair, renovation, upgrading or replacement of assets
identified through the inventory process.
Requests are also made for the construction or acquisition of
new capital assets.
The staff committee reviews the requests for completeness.
The requests provide an opportunity to present to the
governing body (or task force) all capital projects deemed by
departments to be desirable.
Since project requests represent all projects desired, without
consideration for financial capacity, compilation of the requests
is often similar to a wish list.
35

36. Projects Requests
The information included in the requests should facilitate the prioritizing of projects.
Accordingly, the requests should include the following information:
• Project Description: A description of the proposed construction project or the asset
to be acquired.
• Existing Condition: A description of the existing condition to be alleviated by the
project.
• Goals And Benefits: The goals and benefits to be derived through the construction or
acquisition project.
• Funding Schedule: The estimated cost of the project and the timing for funding.
Project timing is based on the assessment of need by the department manager and
may be changed through the prioritizing process.
• Project Funding: Should identify whether the project will be funded by the governing
body's own resources, through an intergovernmental grant or loan, or a combination
of such sources.

37. Projects Requests
Additional considerations that
must be identified include:
• Annual operation or maintenance costs
• Annual reductions in current operation and maintenance
costs
• Additional staffing, particularly when a new service is
involved
• Implementation costs; engineering, construction
management, other internal impacts

38. Projects Requests
Additional considerations that
must be identified include:
• Annual operation or maintenance costs
• Annual reductions in current operation and maintenance
costs
• Additional staffing, particularly when a new service is
involved
• Implementation costs; engineering, construction
management, other internal impacts

39. Project Request Form(s)
39

40. Drafting and Maintaining the
Plan
This entire
process
requires
continuous
monitoring and
revisions
Living
document
subject to
frequent
change
Revisions to
plan to be
published and
brought before
council
Periodic
reports, review
financials,
exceptions and
top issues only
Website
enhancement
to provide
transparent
information

41. Evaluation of Your Program
• If you don’t have a process in place then start here:
Debriefing at the end of projects, programs, or incidents is
a powerful tool. A simple model can look like this…
1. What went well?
2. What went poorly?
3. What could we do better?
4. What did we learn?
5. Actions for follow-up?
• There are many other models out there and some more
formal models or requirements may exist in your agencies
41

42. 42
The Plan, the Forms, the Reports…

44. 44

45. Public Outreach
Outreach
Efforts
• http://www.mindmixer.com/
• http://www.politically-direct.com/
• http://www.granicus.com/solutions/citizen-
participation/
• http://yournorthport.com/
• http://www.engagedenton.com/
• http://telephonetownhallmeeting.com/
• Branding Efforts
• Marketing Plans
• Communication Plans
• Social Media, Website Development
45

46. CIP Public Outreach
Informational Newsletter Mailed to Everyone
Something
for
Everyone
Numerous Info Meetings
and a Telephone Town
Hall Meeting
Website with
Informational
Videos
Interactive Map
with Detailed
Information on
Every Project

47. 47
74%
16%
10%
2015 BOND ELECTION PROJECT BREAKDOWN
PROPOSITION 1 - STREETS - $18,932,340
PROPOSITION 2 - PARKS - $4,206,110
PROPOSITION 3 - PUBLIC SAFETY - $2,631,050
TOTAL = $25,769,500

48. 48

49. Funding Options?
• Revenue Bonds
• Stormwater
• Other people’s
money
• Leveraging
• Smaller projects
• Items that are
not long term
assets
• Multiple types
of debt
instruments
Bonds & Debt
Out of Pocket;
Cash
Special Funds;
Enterprise;
Utilities
Grants;
Donations
49

50. Financing
Capital
Improvement
Programs
How do we pay for it?
What tools do we have at our
disposal?
What partnerships will you need?
What policies will you need to have in
place?
How many of you know the answers
to these questions in your
organization?

51. DEBT
Debt is not a 4 letter word… well it is but…
What are the benefits of issuing debt?
51
WARNING:
POLICY ISSUE

52. There are several options available
to cities for financing capital
projects. These include:
Pay-as-you-go – These are
typically for “maintenance”
projects, e.g. concrete
panel replacement
Certificates of Obligation –
Council approval needed
General Obligation bonds –
Require voter approval
through a bond election.
Revenue bonds – Usually
for Enterprise Funds, e.g.
Water and Sewer systems
– Council approval
Financing
Alternatives

53. GOs – General Obligation Bonds
Requires bond election for authorization
Issued for any public purpose
• Real Property
• Personal Property
• Legal Judgment
• Land Acquisition
Amortization not to exceed 40 years
Secured by issuer’s ad valorem taxing power
• Viewed as City’s most secure obligation
• Texas General Law City (under 5,000 population) -up to $1.50 tax ($1.00 I&S)
• Texas Home Rule City (over 5,000 population) -up to $2.50 tax ($1.50 I&S) as determined by City Charter
Attracts lowest interest rate
I&S tax rate to pay back debt service is not subject to rollback

54. COs – Certificates of Obligation
Requires no voter authorization
•A petition signed by 5% of the registered (Texas) voters can force an election
Notice of Intent to Issue is required
•Published in the local paper on the same day of two consecutive weeks
•First publication must be at least 30 days prior to sale date
When secured solely by ad valorem taxes available purposes are limited to land acquisition, judgment
funding, or purchase of heavy equipment
When secured by an ad valorem tax and are venue pledge, they can be issued for the same lawful
purposes as GOs
Sell at interest rates similar to GO bonds
I&S tax rate to pay debt service is not subject to rollback

55. Some Financing Mechanisms
• Uses the taxes collected on the incremental increase in property
value caused by the development to repay the debt.
• TIF district needs to be established by Council action. Best to
coordinate with other taxing entities to maximize revenue.
Tax Increment Financing (TIF)
• MMD’s are created by the State Legislature at the request of cities.
• They are allowed to establish a tax rate on top of the current city tax
rate.
• They use that additional tax revenue to repay debt.
Municipal Management Districts (MMD)

56. Some Financing Mechanisms
• Defined area within the City or it extraterritorial jurisdiction created
by a Council action
• Created to provide specific services or infrastructure into that area
without the obligation of the community as a whole
• Not based on assessed value
• Not tax deductible
Public Improvement Districts (PIDs)
• Based on measured growth performance, incremental tax value
increase, sales tax receipts, or other economic benefit for the
incentive as payment to the developer
Economic Development Incentives (380 Agreements)

57. Some of
Your Key
Partners
• Cities can select a firm through an RFP/RFQ
process.
• Your financial advisors will coordinate the
process for the bond sale.
• They provide financial analysis, coordinate
the meetings with the bond rating agencies,
and collect, analyze and rank the bids from
prospective bidders when you sell bonds.
• They can also serve as your agent if you
decide to do a negotiated sale.
Financial Advisors
• Cities require a legal counsel that specializes
in the sale of municipal debt.
• This service can also be selected through an
RFP process, or the financial advisor may
provide a list of qualified bond counsels to
choose from.
Bond Counsel

58. The Role of the Rating Agencies
Three rating agencies – Standard and Poors, Moody’s, and Fitch.
Typically for most sales cities obtain ratings from two of the
agencies.
The job of the rating agencies is to determine the quality of
investment someone would make if they purchased your bonds.
AAA is the highest rating followed by AA+, AA, AA- and so forth
(Moody’s). (S&P uses Aaa, Aa+, Aa, etc.)
Sometimes the rating agency will also include a comment regarding
your city, e.g. Stable or Negative.

59. The Role of the Rating Agencies
Rating agencies rate the quality of a city’s debt by evaluating the financial position
of the city including fund balance history, looking at economic development
activity and reviewing demographic/economic data about the community, e.g. per
capita income, housing valuation trends, building permits.
The rating then gives potential investors a sense of the level of risk involved in
buying that city’s bonds. The higher the rating, the lower the risk, the lower the
interest paid.
Don’t try to hide anything from the bond rating agencies! They are looking for
sound financial management practices. They want you to identify the challenges
facing your city, but more important, they want to know you have a plan for
addressing those challenges.

60. Where is your agency?
60

61. WARNING!
• Are you aware of the rating agencies criteria?
61

62. True or False Test
• CIP stands for Capital Improvement Plan
62
FALSE (and TRUE)
• Don’t think of the CIP as a plan.
• Look at it as a Capital Improvement PROGRAM.
• A plan is just a schedule of projects.
• A program can encompass many essential components to capital
project construction:
• funding sources
• overall project schedules and sequencing
• resource availability
• project coordination

63. True or False Test
• If a consultant is used to manage capital
projects, there will be no drain on internal
staff
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FALSE
• Hired professionals can relieve the work load on government staff
compared to performing those same functions completely in-house.
• However, someone still needs to manage the external consultants.
• progress meetings to attend
• invoices to review
• change orders to consider

64. True or False Test
• The CIP should just focus on a year’s worth of
projects
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False
• Looking at a one-year window for any series of projects is misleading because very few
capital projects can be completed within a single year.
• Even those that can will extend across 2 years if initiated anytime after the start of the
year.
• A suggested way of developing the CIP is over a 5-year period (though some agencies
may choose to go much further into the future).
• Beyond the 5-year horizon, a “bullpen” of out-year projects that fall outside that
window can be maintained.
• Each year, as the CIP is updated, year 2 shifts into becoming the new year 1 with the
rest of the CIP moving forward as well.
• Projects from the out years are then brought forward to populate the new 5th year.
• As the CIP is updated each year, projects can be moved back and forth and in and out
of the program based on changes in priorities, funding, needs and so on.

65. True or False Test
• All projects within a CIP must be fully funded
to maintain the integrity of the program
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FALSE
• For a CIP that extends beyond a single year, typically funds have been
ensured for the projects over the life of the program.
• This will often lead to the CIP being referred to as “fully funded”.
• Agency budgets are based on revenue projections.
• Therefore, to refer to a 5+ year CIP as being fully funded is incorrect.
• Instead, it is best of think of the CIP as being fiscally balanced.
• According to the best estimates and projections of funds to be available,
it is anticipated that there will be adequate money to cover all of the
costs of the projects contained in the CIP.

66. True or False Test
• The CIP should only include future
construction projects to have any real value
66
FALSE
• There can be value in the inclusion of other capital investments beyond just
construction projects.
• This is particularly helpful when you consider that these other investments
compete for the same funds as construction projects.
• It is advisable to establish a fiscal threshold for projects and expenditures that will
be included in the CIP. A threshold in the range of $20,000 - $100,000 is a
reasonable place to start.
• Once this figure is established, the CIP can then include new purchases of
equipment and vehicles that also fall above this established threshold.
• fire trucks
• backhoes
• computer systems
• You don’t necessarily want every new car purchase included in the CIP which is
why setting the threshold is important.

67. True or False Test
• The CIP should include all construction
projects to have any real value
67
FALSE
• To keep the CIP manageable, it is ideal to differentiate maintenance-related
projects from new construction.
• There is often separate funding set aside for O&M work vs. new projects.
• Maintenance can often be performed with in-house staff rather than being
contracted out, which again impacts operating funds rather than capital funds.
• This theory of keeping the CIP dedicated to new construction can be applied
to capital expenditures as well.
• Rather than including the purchase of replacement vehicles and equipment in
the CIP, it is best to limit it to new purchases that expand the current fleet or
assets.

68. True or False Test
• The CIP is just a “wish list” of projects that
are desired without any real expectation of
whether they will be completed or not
68
FALSE
• Nothing could be further from the truth.
• Too often, a CIP is considered a random list of projects that an agency “hopes” will be
constructed…eventually.
• Elected officials and constituents must be able to depend on the expected results of the
CIP.
• How much confidence will they have in the agency or its staff if projects are left in a
state of uncertainty?
• Our own staff must be able to plan and coordinate their efforts around a solid program
that they can count on.
• The CIP should be viewed as a road map to be followed each year, providing surety and
predictability for all involved.
• Though the map is redrawn each year as part of the update process, it should never lose
its integrity.

69. Homework
• Map out your capital improvement planning
process and include everyone in the mapping
process, use a facilitator if you wish
• Write a practice with the resulting map that
lays it all out so everyone on the team knows
their roles and the associated timelines for
each step
• Evaluate the results after your next big
initiative and do it again!
69

71. Reference Materials
• CIP Spreadsheet
• TPWA Presentation
• Project Info Form
• CIP Monthly Report
• CIP Ranking System
• GFOA Documents (2)
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Contact Jim at
jimproce@gmail.com