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CITY OF RALEIGH

ADOPTED CIP FY2016-2020

CIP Policies and Practices

The city adheres to several policies and practices to ensure long-term financial sustainability, promote

effective planning, and ensure appropriate use of capital funds. Below is a summary of major items:

Alignment with city-wide Strategic Plan: The Strategic Plan, adopted by City Council in April

2015, serves as the primary guide for capital investments. The plan articulates areas of strategic

focus which will target the City’s efforts and resources in ways intended to have the greatest

impact in the six key focus areas over the life of the plan. Several of the plan’s initiatives require

staff to evaluate and implement capital investments in transportation, technology, economic

development, and other areas.

Defining capital projects: Generally, a capital project will be a fixed asset with a useful life greater

than ten years and with a cost of at least $25,000. Capital projects include not only new assets,

but projects that improve an asset or lengthen its useful life. Scheduled purchases of vehicles

and equipment for routine operations are, generally, addressed through the annual operating

budget. The operating budget also funds routine maintenance of facilities.

The CIP as a policy document: Upon adoption by the City Council, the CIP becomes a statement

of city policy regarding the timing, location, character, and funding of future capital projects. The

CIP represents city administration’s and City Council’s best judgment at that time. Future needs

and financial constraints may result in programmatic changes over the five year period. Policies

and priorities established in the CIP guides subsequent decisions made by city administration

and the various boards and commissions appointed by City Council.

Complementing the city’s comprehensive plan: All capital projects should complement the

comprehensive plan. The comprehensive plan includes specific policies that establish it as the

city’s lead growth and development guide and connect it to the CIP. Policies also require staff to

consult the comprehensive plan when establishing capital priorities, share long-term plans with

other city staff, and identify long-term planning opportunities.

General debt policies: City staff use a long-range debt model to track general debt obligations, as

well as approved but unissued amounts. The model allows staff to forecast debt service

requirements and perform “what if” scenarios. Historically, the city’s general debt service should

not exceed 15% of the general fund budget, and fund balance in the debt service fund should be

at least 50% of annual debt expenses.

Budget Transfers: City Council approves all increases and decreases to active project budgets.

City staff may transfer up to $50,000 from one project to another within the same fund and

category. Project transfers in excess of $50,000 require Council approval. All transfers are

reviewed through an internal approval process.

Identifying operating impacts: Requests for new projects must include an estimate of operating

impacts. These costs include new staffing and operating costs essential to operate and maintain

a new asset, such as a public facility or software system. Examples of operating costs include

utilities, vehicles, annual licensing, and service contracts. Operating impacts do not include new

services or programs that are not essential to the asset’s operation.

Long-range cost estimates: Beginning with the FY2015 budget process, staff will apply cost

escalators to better estimate future construction costs. The city uses a default annual escalator

of 3.5% per year. Staff apply the inflator to new construction and significant building

rehabilitations. In some elements, such as public utilities and transportation, staff apply other

escalators developed for those specific service areas.

Closing Projects: Projects are closed when the approved scope of work is complete. Staff

review project status periodically to identify projects that are finished and can be closed. If the

budget for a completed project is not fully expended, generally, the budget is closed and the

remaining balance accumulates in fund balance. The accumulated fund balance is available to

pay for future projects.

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