HomeMy WebLinkAboutAgenda - 02-23-1979 AGENDA ITEM #!21 January 29, 1979
Memo To: S. M. Gattis
From: Neal Evans
Subject: Capital Improvements Program (CIP) Planning Process
Attached are several documents which describe a CIP process for
Orange County. These include: 1) a brief statement of what a CIP is;
2) a very simple form with policies and procedures for preparation and
administration of the departmental requests; 3) a completed sample of
#2; 4) a copy of the summary sheet for all projects; 5) a calendar for
completion of the first year of the program.
The format is very simple, but a lot of work needs to go into pro-
ducing the information. In addition to the data. justifying the need for
a particular project, cost determination (particularly for the next few
years of the CIP) may require professional assistance from outside sources
that will involve some up-front County funds. In future years these costs
would be included in the total capital budget.
The proposed format and calendar addresses primarily. the County
without the schools internal process. It leaves open their internal pro-
cess assuming that it will be readily adaptable to the County. It also
suggests that a capital budget be completed a full month ahead of the
time required by General Statutes. I personally feel there should be more
on-going interaction with the schools so that WE! are dealing with the
superintendents much as we would any agency head of the other agencies
with boards that heavily influence the head's action. This is the primary
question for board consideration: how do we interact with the schools at
both the board and administrative levels?
Other questions include:
1) Is the calendar adequate?
a) Does the board want more interaction with manangement
during the process? Reports?
b) Does the board want to add a public hearing(s) before
or during the process? It is not required.
2) Is the format adequate?
a) Is there other information that decision makers would
like? Our assumption is that everything on the forms
will be adequately documented in staff files.
b) Are the categories for inclusion in the CIP including
equipment and dollar amounts satisfactory?
c) Are the priority rankings appropriate for preliminary
action at the staff level?
THE CAPITAL IMPROVEMENTS PROGRAM
Definition. A Capital Improvements Program (CIP) is a list of capital projects,
or outlays, which a locality plans to make within a five or six-year period.
The intent of such a program is to identify and rank capital expenditures for
several years in an effort to provide for orderly replacement and development
of facilities. Such a plan identifies projects, their costs and priorities,
as well as means of financing and estimated operating expenditures.
The CIP form itself divides each project into elements (e.g., planning and
design, land acquisition, construction, etc.); and, distinguishes among
different time periods (prior years' expenditures, current expenditures,
and planning years one, two, three, etc.). See charts 1 and 2.
Capital Projects. Factors which distinguish capital projects from operating
expenditures, thus necessitating special budgeting and planning procedures,
include the following:
--the magnitude of the expenditure, which often requires special funding
methods.
--the fact that the effects of such projects usually extend far into the
future.
--the need to delineate between capital items, with both present and future
benefits, and operating expenditures.
--the fact that capital projects are frequently passed to following
governing boards.
Criteria for Determining Capital Projects. In sum, the four generally accepted
criteria used to identify capital expenditures include:
1. Durability. The project is expected to yield benefits for several years.
2. Non-recurrence, or irregularity, of the expenditure.
3. Relatively large expense.
4. Acquisition of a fixed asset, in most cases.
Funding Sources. Sources of financing capital projects consist of one or more of
the following: local current revenues, bond financing, federal and state aid,
capital reserves, benefit assessments, subdivision regulations, and lease-
purchase agreements.
Process. The CIP process is comprised of three stages.
1. Planning: Formulation of the CIP and revenue projections.
2. Budgeting: Project evaluation, financing, and authorization.
3. Implementation. Ir
Priority Ranking. In developing a CIP, it is frequently necessary to rank order
requests. While various cost/benefit analyses may be used to arrive at
priority ranking, one generally accepted ranking scale is shown below.
1. Urgently needed for safety of persons and property.
2. Renovation or addition to improve an existing facility.
3. New facility to relieve existing, undesirable situation.
4. New facility to handle workload expansion in existing program.
5. New facility for new program or service.
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Other criteria may include: degree of need, cost factor, official policy,
and timing (for coordination with other projects).
CAPITAL IMPROVEMENTS PROGRAM
Policies & Procedures for Preparation & Administration
I. General
A. Definition and outlays,awhichrav locality rplans tolmakeswithinta
of capital projects,
five or six-year period. The intent of such a program is to identify an
rank in importance capital expenditures for several years in an effort to
provide for orderly rrerelatin nsuchdneedslandeprioritieslto�the funding
P
provides a means for 9
bodies' financial capabilities.
B. Sco e. Projects to be included in the CIP are those which have a long
ife1span (five or more years) and involve large dollar costs. Such .
projects are represented by capital costs as distinct from operating,
maintenance, or service costs. The following criteria should be used in
determining whether a project should be included in the CIP:
1. $5,000uand have an expected facilities
expectedlifehspan of ten minimum
ten or more years.
2. Expansion or renovation of existing facilities requiring a
minimum outlay of $5,000.
3 ofnateleastn325r,000aand havingpannexpectedilifenspanof expenditure
5or
more years.
4. Purchase of developed or undeveloped land for use as a public
facility.
Note: In respect to Orange County Schools and Chapel Hill
Schools, items to be included in the CIP are defined by
General Statutes 115-100.6(f)1-3.
II. Preparation of Requests
General Procedure. Preparations of requests should generally procede as
follows.
1. Department or agency reviews long-range capital needs, 'deciding
which projects should be included in the requests during the next
six years. Projects should then be ranked in priority. One
generally accepted ranking scale is shown below.
(a) Urgently needed for safety of persons or property.
(b) Renovation or addition to improve an existing facility.
(c) New facility to relieve existing, undesirable situation.
(d) New facility to handle workload expansion of existing
program.
(e) New facility for new program or service.
2. Department prepares "Capital Request Worksheet" for each new
project requested. Funding schedule should reflect actual
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expenditures as opposed to time of contract.
(1) "Project Description." Describe the nature of the project.
(2) "Project Objectives." State objectives of project including
number of clients to be served, area served, etc.
(3) "Costing Method." Describe method used in arriving at total
cost figs ure,e.g., 130.00/sq. ft. x total area."
(4) "Justification for Funding Sc'hedule." Describe the rationale
for th schedule of expenditures, e.g., "July--
architectural plan.
(5) "Relationships to Other Projects and De artments." If this
request is related to any VL.IICI existing or future project,
briefly describe relationship.
(6) "Operating Budget Impact." Estimate the impact this project
would have on the operating budget. Briefly explain the
method used for arriving at this estimate.
(7) "Type of Project." Check category.
(8) "Other Agency Interaction:" Briefly describe the requested
to any other agency.
(9) "Pro ect Priorit If more than one project is submitted,
an in order o, priority.
3. Complete reverse side of project worksheet, showing schedule of
expenditure by category.
CAPITAL IMPROVEMENTS PROGRAM SUMMARY
Orange County
I Projected Cost By Year Total
Project Project Prior Capital
Number Title Years Cost
Cost, Capital
Budget 1980-81 1981-82 1982-83 1983-82 1984-85
F
i.
Total
ORANGE COUNTY CAPITAL IMPROVEMENTS PLAN
Department
Capital Request Worksheet Date
1. Project Description
2. Project Objectives
3. Costing Method
4. Justification for Annual Funding Schedule
Relationships to Other Projects or Departments
6. Operating Budget Impact Explain: 7. Type of Project
Replacement
Personnel � $.
Expansion
Maintenance $
New
Utilities $
Other $
8. Other Agency Interaction (Regulatory, Approvals, Funding Sources, Etc.)
9. Project Priority Submitted) by-
No. of
(Office Use)
Estimated Prior Budget yr. Future Program Years Total
COST BREAKDOWN Total Appropi- 1979- Cost
Cost ations 1980 1980-1981 1981-1982 1982-1983 1983-1984 1984-1990
A. Land Acquisition
B. Architect & Eng.
C. Construction
D. Equipment
E. Legal & Admin.
F. Contingency
Total Cost
Funding Sources
Available Cash
Future Approp.
Bonds
j
Grants & Other
I
1
' Total Resources
r
1
t
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j
January 25, 1979
ORANGE COUNTY
PROPOSED CIP CALENDAR
1978-79
DATE PARTICIPANTS ACCIVITY
2/5 Board of Commissioners & Presentation of CIP format for con-
Staff sideration and approval
2/6 Finance Officer Distribution of Capital Project Forms
to County Department Heads
2/ Commissioners and School Presentation of CIP format to School
Board Members Board Members and discussion of pro-
posed interaction 'during CIP process
2/ County Staff and School Development of administrative pro-
Administrators cess for coordination with schools
3/30 Department Heads Completion of CIP requests and sub-
mission to the Finance Officer
•/30 Finance Officer Projection of estimated revenues
and operation'budget reported to
the County Manager
3/30 to 4/10 County Manager Meetings with Department.Heads to
review CIP submissions
4/10 County Manager Completion of recommended CIP in-
cluding project priority, cost,
method of financing, and projected
operating costs.for County portion
of CIP
4/16 County Manager and School
Administrators Integration of school capital pro-
jects with County projects
4/23 County Manager Completion of integrated CIP with
priorities recommended to Board of
Commissioners for all projects
5/7 to 5/ Commissioners Review of CIP and tentative Board
action
/ Commissioners pproval CIP
79-80
operating budget
i