A Capital Improvement Plan (Program), or CIP, is a short-range plan, usually four to ten years, which identifies capital projects and equipment purchases, provides a planning schedule and identifies options for financing the plan. Essentially, the plan provides a link between a
municipality

Municipality

A municipality is essentially an urban administrative division having corporate status and usually powers of self-government. It can also be used to mean the governing body of a municipality. A municipality is a general-purpose administrative subdivision, as opposed to a special-purpose district...

, school district

School district

School districts are a form of special-purpose district which serves to operate the local public primary and secondary schools.-United States:...

, parks and recreation department and/or other local government entity
and a comprehensive and strategic plans and the entity's annual budget

Budget

A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...

.

Benefits

A CIP provides many benefits including:

• Allows for a systematic evaluation of all potential projects at the same time.
• The ability to stabilize debt and consolidate projects to reduce borrowing costs.
• Serve as a public relations and economic development tool.
• A focus on preserving a governmental entity's infrastructure
  Infrastructure
  Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
  
   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. For example, it is not uncommon for a large city or county to incorporate into its CIP the capital needs of a school district, parks and recreation department and/or some other public service structure.

Features

The CIP typically includes the following information:

• A listing of the capital projects or equipment to be purchased.
• The projects ranked in order of preference.
• The plan for financing the projects.
• A timetable for the construction or completion of the project.
• Justification for the project.

Overall Process

Prior to undertaking the development of the CIP, the government entity will want to define the criteria for what kind of projects or equipment are to be included and organize a process for developing the plan. What is defined as a capital project or capital purchase may vary from city to county to district to state depending on the size of the local government provisioning the plan. Generally, they will be tangible items that have a life expectancy greater than one year.

A local government will also need to forecast where it believes it will face future demands and growth, which will involve an inventory of existing facilities, infrastructure and equipment. In addition, a local government will want to develop basic policies for implementing the plan. Because the CIP includes financing issues, the municipality may want to seek advice from their financial advisor and/or bond counsel. A review of the municipality's current finances is also vital.

Once the CIP is finalized, the local government is required to hold a public hearing

Town meeting

A town meeting is a form of direct democratic rule, used primarily in portions of the United States since the 17th century, in which most or all the members of a community come together to legislate policy and budgets for local government....

 before the plan is adopted by a city council

City council

A city council or town council is the legislative body that governs a city, town, municipality or local government area.-Australia & NZ:Because of the differences in legislation between the States, the exact definition of a City Council varies...

, a board of regents and/or a bond review commission.

Specific Steps

1. Establish a Capital Planning Committee with Bylaws
2. Take Inventory of Existing Capital Assets
3. Evaluate Previously Approved, Unimplemented or Incomplete Projects
4. Assess Financial Capacity
5. Solicit, Compile and Evaluate New Project Requests
6. Prioritize Projects
7. Develop a Financing Plan
8. Adopt a Capital Improvements Program
9. Monitor and Manage Approved Projects within the CIP
10. Update Existing/Ongoing Capital Programs

External links

• Capital Project Management, British Columbia Ministry of Education
• City and County of San Francisco Ten Year Capital Plan
• City of Vancouver Capital Plan
• Government Finance Officers Association Committee on Economic Development and Capital Planning