What Is the Capital Improvement Plan and What the Vote on the Plan Means for Ashland

Because of the amount of information on our Capital Improvement Project Plan, this post is written as an outline rather than in narrative form.

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Capital Improvement Projects (CIP) Overview: Timeframe, Inputs and Individual Project Approval

1. The Capital Plan is a 20-year document compiling all the infrastructure needs for this time period. 
2. Each department (water, electric, etc.) has a master plan. This plan outlines what subject matter consultants, independent of the city, recommend the city do to keep infrastructure functioning at high service levels.
   1. Master plans are further supported by facilities plans, and specific assessments required outside of the master plan planning period.  
3. These plans are the source document for the full list of CIP projects.
4. The first two years has the most refined project estimates based on the stage of their engineering.
   1. Final Engineering Phase and Construction will be more refined than those projects in Beginning Engineering.
   2. Projects estimated in the master plans will include a 30% contingency with an accuracy range of -50% to + 30% à This is due to the lack of scope elements that become available as the planning moves through engineering phases.
5. It follows that as the timing extends into out years, the estimates are still being worked as project scopes and needs are better defined. 
6. Next, the budget process only allocates funding to the two-year portion of the Capital Improvement Plan, not the full 20. 
   1. Remember the out-year project cost estimates are conceptual. As the work scope is better defined the estimates will be honed. Project costs are refined as they go through engineering phases.
   2. Additionally, priorities and needs change. The out-year projects also change. 
   3. For example, you know you need a roof in 5 years. In that year five, the roof may be doing great, but the furnace needs to be replaced. Clearly the plan gets shuffled. Similar on a larger scale with CIP. 
7. Our CIP list acts like an ideal list. The plan includes the projects our city departments would like to accomplish, again, based on their respective master plans.
   1. Some are driven by regulatory needs, others by end-of-life cycle, others still are lower priority.
      1. Note: Public Works has added categories to help identify projects that are regulatory, capacity, deficient, or end of life cycle.
   2. Not all will be approved and completed. 
8. It follows that, though the list is approved the projects on that list are NOT considered approved. 
9. Each project must come before council at all stages of the project, from concept, design, detailed engineering, contracting and build. At any point council can vote down the project.
   1. We saw this a few years back with Nevada Street Bridge. The bridge was on the list. However, the project was not approved.

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Council’s Vote on the CIP Plan and What it Means:

IMPORTANT:

• Regardless of Council’s vote, the plan is still loaded into the Budget.
• Regardless of Council’s vote, the first two years of the plan are allocated funds.

Impacts Ashland’s ability to access funding resources:

Lenders and grantors look at the council’s acceptance or rejection of the CIP plan in their funding decisions.

Many institutions require a commitment to the CIP plan from the local jurisdiction to secure funding.

• If the council does not support the plan lenders charge higher rates for funding
• Likewise, institutions may deny funding applications all together
• It is as if acceptance of the plan acts like a credit rating of 750 and helps secure low-cost funding IF needed.
• Conversely, rejection of the plan makes the city a higher credit risk, increases the cost to borrow, and may result in not receiving funding at all.

Grants:

• Grantors ask municipalities “is this project in an adopted plan.”
• If the CIP is not accepted, then the answer to this question is “no” and the ability to obtain the grant is subsequently diminished.
• Example: This situation is similar to trying to put an offer in on a home but not having a pre-qualifying letter.

Impacts to Alternate Revenue Streams:

• Projects in the CIP include tasks needed to prepare property for designation as surplus and subsequent sale.
• Such sales generate one time revenue resulting for disposition of the property.

Increased cost due to regulatory non-compliance, deferred maintenance, and emergency repair:

• Failing to meet regulatory requirements due to deferred maintenance results in fines and potential lawsuits.
• Emergency repairs, as compared to pre-planned repairs, have greater adverse impacts on rate payers due to their emergent nature an unpredictable timing.
  • Similar to if a homeowners cleanout cap is broken and the homeowner puts off repair. When the line backs up, and it is a holiday, it will be comparatively more expensive to have the plumbing issue repaired.
  • The expense is driven not only be timing but a repair that is more complex than the initial broken cleanout cap.

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