Financial policies

11. Capital budget policies

The objective of the capital budget policies is to ensure construction and maintenance of capital assets and infrastructure in the most cost-effective manner.

11.1 Capital Improvement Program

The City prepares and adopts a six-year Capital Improvement Program (CIP) that details each capital project, the estimated cost and funding sources. An adopted point rating system is used to rank and prioritize recommended projects. The CIP includes City infrastructure, but does not include capital planning for major City facilities, including the Minneapolis Convention Center or Target Center, nor does it include redevelopment activities.

11.2 Planning direction provided

The adoption of the CIP is to assist in planning and provide direction for City departments, but it does not establish permanent Council commitment to the out-year projects, either in scope or timeline of construction.

11.3 Operating Budget impacts

Operating expenditures/savings of each capital request are included in the cost of implementing the CIP and reflect estimates of all personnel expenses and other operating costs attributable to the capital outlays. Departments receiving capital funds must account for the increased operating costs resulting from capital projects.

11.4 Repair and replacement

The City strives to maintain its physical assets at a level that protects the City's capital investments and minimizes future maintenance and replacement costs. Where possible, the capital budget shall provide for the adequate maintenance, repair and replacement from current revenues.

11.5 Capital requests outside the CIP

In addition to physical assets narrowly defined as infrastructure, the City needs to maintain and replace capital equipment such as fleet and rolling stock, software, personal protective equipment and other depreciable assets that are generally not large enough or of the asset nature to fund through the City’s CIP process. These non-CIP assets are addressed via the annual operating budget-setting process, and shall at minimum include consideration of ongoing maintenance costs and future replacements prior to being requested. Fleet replacements shall be included as part of the City’s Current Service Level to the extent that they are included in a fleet replacement plan and the responsible department is charged in advance for planned replacements. IT-related requests shall be submitted in cooperation between the requesting department and the IT Department and will be reviewed by the IT Governance Committee to ensure consistency with the City’s longer-term technology plan.

Future cost increases above those costs that are presented in individual budget requests or the Fleet Replacement Plan may be funded by submitting another request during the City’s budget setting process or by using discretionary budget.

Whenever possible, the City shall utilize external resources, but recognize replacement costs associated with externally funded equipment. External resources received after funding has been appropriated shall replace funding for the department and not expand spending to the extent that the external revenue does not allow supplanting. Funding shortfalls in Internal Service Funds in the first year of the plan may be funded by General Fund fund balance with the expectation that recognized shortfalls in subsequent years will be funded through the approved rate models.

11.6 Public art

The requirements for investment in Public Art shall be the equivalent of 1.5 percent of the total amount of net debt bonds authorized by the City Council through the City’s annual budget process as described in Resolution No. 2015-Or-082.

11.7 Neighborhood Park and Street Infrastructure Plans

On April 29, 2016, the City Council approved ordinance amendment 2016-031 amending Chapter 16 of the Minneapolis Code of Ordinances by adding Article XIV. Neighborhood Park and Street Infrastructure Plans. The amendment establishes a 20-year funding plan to make significant additional capital improvements to neighborhood parks and street infrastructure utilizing racial and economic equity criteria while also avoiding the uncertainty and inflexibility of various potential ballot measures. The Capital Improvement Plan will be created in alignment with this Ordinance. The financial plan is fully described in Resolution 2016R-151 also approved on April 29, 2016. Details of the ordinance amendment and funding resolution are available at https://www2.minneapolismn.gov/government/departments/public-works/tpp/20-year-plan/.