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introduction FY2014
CAPITAL INVESTMENT PROGRAM
5 - Y
E A R
C
A P I T A L
I
N V E S T M E N T
P
R O G R A M
OVERVIEW
Annually, local governments assess financial capacity to
plan for capital investment projects. These large financial
investments are required to maintain and expand public
facilities and public infrastructure. Ongoing service
delivery can be assured only if adequate consideration is
given to capital needs by the budget process. A Capital
Investments Program is a tool used by governments in
conjunction with the 5-Year Long Range Financial Model
(5YrLRFM) to ensure that decisions on capital projects and
funding are made wisely and are well planned.
The Town’s Five Year Capital Investment Plan (5YrCIP) is a
multi-year planning period for capital projects, currently
for the 2014-2018 timeframe. The program outlines
project details including estimated timeframes, cost, and
funding sources and discusses impacts to future operational
budgets. A Capital Investments Program should not be
confused with a Capital Investment Budget. A Capital
Investment Budget represents the first year defined by the
Capital Investment Program that appropriates funds for
capital spending. Morrisville’s Annual Capital Budget is
reported, and adopted in conjunction with the Annual
Operating Budget. Capital Investment planning is a
dynamic process; changes do and should occur in the
process from year to year to adapt to changing elements.
The plan is updated and re-adopted every two years to
fine-tune cost, adjust availability of resources, and plan
projects within the projected financial capacity.
PURPOSE
The 5YrCIP serves a number of important functions for
local government. Capital project planning should plan
for projects that maintain or improve the Town’s fixed
assets. The Town is primarily responsible for the public
service in those assets. In addition, capital project
planning should:
Support Town Goals and Initiatives
Prevent deterioration of the Town’s existing
public infrastructure
Encourage and sustain economic development
within the Town
Increase efficiency and productivity of Town
operations
Enhance Decision Making
Plan for irregular capital expenditures
ADVANTAGES
Build public consensus for projects and improves
community awareness
Improves Inter-/Intragovernmental cooperation
and communication
Avoids waste of resources
Helps ensure financial stability
DIFFERENTIATING CAPITAL FROM
OPERATING BUDGET
Capital projects typically are large, non-recurring
expenditures that would distort the annual operating
budget if appropriated. Typical criteria utilized to
determine types of expenditures are cost and useful life.
Cost is a value limit placed on the expense. Useful life is
defined as projects having a long service life and non-
recurring nature. Annual items such as salaries, office
supplies, routine maintenance, and service contracts are
typical of operating expense and therefore are not
appropriate for capital expenses. The difference
between departmental capital outlay items in annual
operating budget and capital project items in CIP:
1.
Departmental capital outlay items shall not be
submitted as part of CIP. Departmental capital
outlay items include equipment/tools, furniture,
office equipment, minor remodeling, or
construction below $100,000.
2.
All fire apparatus equipment items are funded
through a Capital Reserve Fund and are therefore
not associated with the 5YrCIP.
To qualify as a capital project for the 5YrCIP the project
should meet the following criteria:
1.
Construction and/or acquisition of public asset is
greater than $100,000
2.
Project requires debt funding
3.
Provide for the acquisition or construction of land
or any public facility, to include consultant or
professional service related to the facility
4.
Provide for the acquisition of equipment for any
public facility when first constructed or acquired
5.
Expenditures, including additions to existing public
facilities, which increase the square footage or
value of the facility
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