A Capital Improvement Program
(CIP) is a roadmap that provides
direction and guidance for the
City of Mesa on carefully
planning and managing its
capital and infrastructure
assets. Identifying capital
projects and their anticipated
funding sources assists in the
planning and scheduling of
finances for projects and the
manpower needed to plan, design,
and construct the projects. The
CIP promotes coordination of
capital projects that are from
different program areas but are
similar in scope or in the same
geographical area of
improvement. Examples of
projects in Mesa's 5-Year CIP
include street construction,
water treatment plants,
wastewater facilities, park
improvements, libraries, mass
transit, airport improvements,
gas lines, fire stations, police
precincts, and public building
construction. Land purchases are
also listed in the 5-Year CIP
since it is considered a capital
asset. These projects are
long-term in nature (over one
year) to complete and are
usually financed over a period
of time. Typically, a CIP
project has a dollar amount over
$10,000. The first year of the
5-Year CIP is referred to as the
capital budget of a project
while the remaining four years
are referred to as the
programmed amount for a project.
How are
projects in the Capital
Improvement Program paid for?
The 5-Year CIP is a format by
which the City uses to review
the funding of desired capital
improvements that compete for
scarce financial resources.
Generally, there are two primary
sources of funding for capital
improvements - revenues sources
(various) and the issuance of
City bonds. Other sources such
as State Aid and Federal Aid may
augment the funding for
projects.
Revenue - Revenue
sources range from general and
special revenue (sales and
development taxes, Highway User
Revenue, State shared revenue,
Federal and State grants, fines)
to enterprise revenue (electric,
gas, water, solid waste, etc.).
Bonds - The issuance
of City bonds is another major
source of funding for capital
improvements. Issuing bonds is
not only a common practice among
cities; it is the primary and
most widely accepted method of
funding large capital projects
for municipalities throughout
the nation. There are three
types of "bond" fund projects in
the 2004-2009 CIP book. They are
listed below with their
definitions:
General Obligation (G.O.)
- General obligation bonds
are categorized into two
groups. The two groups are:
20% - Under Arizona
law, cities can issue
G.O. Bonds for purposes
of water, wastewater,
artificial light, open
preserves, parks,
playground, and
recreational facilities
up to an amount not
exceeding 20% of
assessed valuation, in
this case, the secondary
assessed valuation for
Mesa.
6% - Under Arizona
law, cities can issue
G.O. Bonds for all
purposes other than
those listed above
(definition of 20% G.O.
Bond), up to an amount
not exceeding six
percent of assessed
valuation, in this case,
the secondary assessed
valuation for Mesa.
Utility Revenue Bonds
- Utility Revenue Bonds have
no statutory limitations as
to the amount of which may
be issued. Projects that
fall into this category are
Gas, Water, Wastewater, and
Electric projects. Bonds
used for these projects are
repaid from revenues
received from the City's
customers of that particular
utility.
Highway User Revenue
Fund (HURF) Bonds - HURF
Bonds are bonds secured by
revenues received from the
State of Arizona. These
revenues are collected from
vehicle taxes, penalties,
interests, and fees. Only
street transportation
related activities and
projects could utilize these
types of bonds.
Fund source designations that
you will see in the 2004 - 2009
CIP book for projects are as
follows:
010 - General Fund G6 -
General Obligation 6% Bonds
011 - 1/2 Cent Sales Tax
Revenue G20 - General Obligation
20% Bonds
020 - Utility Fund Internal
Services Fund HB – HURF Bonds
070 - Internal Services Fund
UR - Utility Revenue Bonds
400 - Local Transportation
Assistance Fund FA - Federal Aid
440 - 1% for the Arts SA -
State Aid
453 - Park Impact Fees E/S -
E-Streets Financing
454 - Cultural Impact Fees
ELR - Electric Replacement
Extension Reserve
470 - Highway User Revenue
Fund (HURF) GSR - Gas
Replacement Extension Reserve
WTR - Water Replacement
Extension Reserve
WWR- Wastewater Replacement
Extension
Reserve
