The Need for a Capital Improvement Plan

As discussed in the previous blog post, “Is Your Town “Ready” for Redevelopment?” the representatives of Michigan Economic Development Corporation had noted a significant number of smaller communities in rural Michigan didn’t have Capital Improvement Plans (CIP). This is alarming and disheartening as a number of smaller communities that I have worked with over the years didn’t have a CIP.

Capital Improvement Plans are important for the long-term planning for significant expenditures that are not regularly in your annual budget. Full-size dump trucks/arterial snow plows often cost in the realm of upper five-digits, tractors for public works six digits. Have you planned for their replacement?

But what about that well that needs improvements to flood proof it or to bring the water into compliance with possible state regulations coming down the road? What about that sewer system that is nearly at capacity or does not currently meet EPA mandates?

Eventually the library needs the HVAC system replaced. City Hall needs a new roof in a few years.

Have you planned for which years these large expenses will take place? Does your city council\village board really know the cost, or will they just deal with the sticker shock when it happens? They may have been informed that the improvements to the sewer plant may cost a couple million dollars when the engineering study was presented a few years ago. But inflation has hit construction costs significantly lately, do they know how much that cost has changed, or will likely change in five years?

Just Do It

It’s good for a consultant to prepare the CIP each year if your community doesn’t have the capacity. But a cash-strapped community can still prepare a remedial one on their own. A simple excel spreadsheet can be prepared to get the information to your decision makers. Do a Google search for examples from other communities, or reach other nearby communities that may have a version you can boiler-plate off of. There’s no reason to be frustrated by trying to start from scratch.

Know the Truth

Don’t just take a hip shot at the costs. Talk to those who know the actual costs for each item in the CIP. These people are also the best persons to discuss anticipated inflation in the coming years so that you can put the best estimate of inflation-adjusted cost for the specific year that you are programming for.

Don’t stop

Don’t just draft and approve a CIP and then let it set on a shelf. Refer to it in staff reports so that decision makers can’t say they’re surprised when a purchase starts down the approval process.

Also, update it at least yearly. Make sure the costs of a project or purchase are still viable. Readjust priorities as necessity arises.

Once you’ve done it the first time and have a base template to work from, it is easier from there on out. Maybe in future years the addition of project summaries or aesthetic improvements can be added. Start small and evolve as you see fit or as the decision makers desire.

Conclusion

Creating a Capital Improvements Plan is an important aspect for communities of any size. It is important for the long term planning of spending for large ticket items though. But don’t over-think the process. It’s only as hard as you make it.