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1 <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br />INTRODUCTION <br /> <br /> <br />What is a CIP? <br /> <br />A Capital Improvement Program, or CIP, is a multi-year (5 – 10 years) capital expenditure plan <br />for a city’s infrastructure (such as streets, parks and utility systems), vehicles, equipment, and <br />public buildings. It identifies the major projects needed and desired by the community, their <br />potential costs and how they would be financed. Including a project in a CIP does not commit <br />the city to that project. The City Council must specifically authorize each one, and the <br />associated funding, before any project may proceed. When the CIP is reviewed (ideally annually, <br />in conjunction with the budgeting process), projects may go forward as planned, advance ahead <br />of schedule, be removed entirely, or new projects may be added, depending upon changes in <br />circumstances and priorities. <br /> <br />The Minnesota Land Planning Act requires that the implementation plan portion of the <br />Comprehensive Plan include a CIP for major infrastructure needs (transportation, wastewater, <br />water supply, parks and open space) for a five-year time period. Cities often expand the scope of <br />their CIPs to include other capital needs (major equipment replacements, for example) and <br />sometimes look beyond the five-year time period, up to 20 years in the future for some projects. <br />Such projects represent more of a “wish-list” that can be evaluated each time the plan is updated. <br /> <br />As a part of the Comprehensive Plan, the CIP has some legal standing. Minnesota Statutes <br />Chapter 473.865 provides that “a local governmental unit shall not adopt any official control or <br />fiscal device which is in conflict with its comprehensive plan.” A fiscal device includes a budget <br />or bond issue; so it is important that the plan and CIP be kept-up-to date and in sync with city <br />budgets. <br /> <br />The primary benefit of a CIP is as a financial planning tool to help the city plan for the impact of <br />capital needs on future budgets and property taxes, and to help forecast the need for borrowing to <br />undertake major projects. The information developed as part of the capital planning process can <br />help document the need for various projects and assist the City Council to sort out competing <br />priorities. <br /> <br />Scope of the CIP <br /> <br />Lake Elmo’s CIP includes all capital projects that cost at least $25,000 and have a useful life <br />span of five years or longer. Projects include all capital needs including major repairs to <br />buildings and equipment purchases and replacements. Any projects not meeting these parameters <br />would be reviewed as part of the annual operating budget but would not be included in the CIP.