CAPITAL IMPROVEMENT PROGRAM

The Capital Improvement Program (CIP) is a living and evolving document that is built upon a foundation of master planning. The CIP requires biennial updates based on updated master plans, changes in need or prioritization, changes in funding mechanisms and changes to goals or policy directions.

Master plans or similar planning documents ensure the corresponding utilities and enterprise funds can accommodate growth and keep infrastructure systems fully operational and meeting regulatory requirements. Master plans enable a long-term plan to be developed and strengthen the intent to present the most responsible infrastructure improvement costs. Master plans assess the existing systems, establish level of service goals, review future demand, develop a plan for capital improvements, operations, and ultimately propose a rate structure and other financial guidance to enable adherence to the plan. Typically, master plans are reviewed and updated every seven to ten years depending upon the system changes and should be evaluated at every two-year budget cycle to update costs and verify priorities. Updates on this frequency ensure inclusion of Council goals, new ordinances, changes in the procedures and development of our community, as well as technology advances.

In addition to each master plan, operational requirements are assessed for capital planning. When major infrastructure replacements are necessary, these projects can often be “capitalized”. This is most easily described with the street division’s pavement condition index (PCI) and the resulting street overlay projects. This is an operational requirement and the condition of each street is not specifically evaluated for the Transportation System Plan. With the Food and Beverage tax being shifted to arterial and collector streets, the basis for prioritization is the PCI. The major repairs and replacement of asphalt are considered capital expenses and as such, included in the CIP.

Staff has added the PCI rating for the roadway rehabilitation projects to provide an understanding of the need to perform street maintenance projects. Staff and the Transportation Commission also recommend a minimum PCI of 70 be a performance metric in the 2023-2025 Biennium and subsequent budgets. Also as specified in Ashland Municipal Code 2.13.030 the Transportation Commission is to make funding recommendations to the Public Works Director on the transportation section of the City’s CIP.

The City distinguishes capital projects from general maintenance items. Capital projects and are typically for new construction, expansion, major renovations, replacements, or projects that substantially increase the life of an asset. Many projects are multi-year, beginning with planning, design then construction. Some have multiple funding source including grants and debt service instruments that are paid back through user fees from each specific enterprise fund.

Only major capital items are included in the CIP. Major capital expenditures are defined as follows:

• The item is tangible
• The value is $50,000 or over
• The life expectancy is at least seven years
• If an improvement, then the value of the asset is increased, or the useful life is extended beyond that originally anticipated.

Major capital assets may include such items or projects, a refuse truck, water line replacement, or construction of a building to name a few.

Minor capital expenditures will be budgeted at the department/division level and are not included in the Capital Improvement Program. Minor capital expenditures are defined as follows:

1. item is tangible
2. value is at least $10,000, but less than $50,000
3. life expectancy is at least two (2) years