Capital Improvement Plan (CIP)
A multi-year planning document that schedules and prioritizes major infrastructure projects, roads, buildings, utilities, and equipment.
How It Works
Most U.S. cities maintain a 5-year or 10-year CIP that identifies needed projects, estimates total project cost (including design, construction, equipment, and contingency), lays out year-by-year cash flow, and identifies funding sources by project. The Government Finance Officers Association (GFOA) publishes best-practice guidance recommending CIPs cover at least five years, integrate with the operating budget to capture future operating impacts, and use formal prioritization criteria such as health and safety, legal mandates, asset condition ratings, and return on investment. The CIP connects a city's long-term infrastructure needs to its annual capital budget: projects in year one of the plan are typically adopted as the binding annual capital budget, while out-year projects are planned but not yet appropriated. The CIP is updated annually as priorities shift, new needs emerge, and project costs are refined. Typical funding mixes include 40-60% general obligation bonds, 15-25% federal and state grants, 10-20% pay-as-you-go general fund transfers, and the remainder from enterprise fund capital or impact fees. Under GASB 34, cities must report infrastructure assets on government-wide financial statements and either depreciate them or use the modified approach requiring condition assessments every three years. CIPs that fail to address deferred maintenance, like those of Detroit pre-2013 and Flint pre-2014, telegraph future fiscal distress. The CIP feeds the debt burden (20%) and spending efficiency (15%) factors of the CitySpend Fiscal Health Score.
Related Terms
- Capital Budget, The portion of a city budget dedicated to long-term infrastructure investments like buildings, roads, vehicles, and technology systems.
- General Obligation Bond (GO Bond), A municipal bond backed by the full faith, credit, and taxing power of the city, meaning the city pledges to raise taxes if necessary to repay bondholders.
- Infrastructure, The physical assets that support city operations and resident quality of life, roads, bridges, water mains, sewer systems, buildings, and technology systems.
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About This Definition
This definition is part of the CitySpend Municipal Finance Glossary, 59 terms explaining how city governments fund and manage public services. All definitions are written in plain language for taxpayers, journalists, students, and municipal bond investors.