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CIP 2017 to 2026

Town of Chichester

Capital Improvements Program Report
2017 to 2026


November 30, 2016



Capital Improvement Program Committee
Matthew Cole, Ann Davis, Allen Mayville, Michelle Plunkett and Brenda Roukey


Table of Contents

1. The Committee’s Situation  1
2. The Capital Improvements Program     1
3. Caveats Regarding Highway Projects   4
4. Recommendations for 2017     4
5. Estimating Future Costs      5
6. Recommendations for 2017-2026        5
7. Leveling of Future Tax Burdens       6
8. Recommendations for Policy and Process Improvement   6
Appendix A: Descriptions of Projects/Purchases  7
Appendix B: State Law Regarding CIP     9
Appendix C: Chichester Town Vote Regarding CIP  10
Appendix D: The CIP Cycle       11


Acknowledgments

The CIP Committee would like to thank the Board of Selectmen and all of the town departments and their staff for their cooperation in the preparation of this report.

Department Submissions

Forms and materials submitted by the town departments during the Capital Improvement Program process are available for viewing by the public at the Town Hall.
1. The Committee’s Situation

The year 2016 brought submissions to the Capital Improvement Program from Town departments to a total of $6,016,566 for the next 10-year period. While most of these submissions have merit, realistically, in a town of approximately 2,500 inhabitants and a finite tax base, it will be difficult to fund a 8 million dollar total.

The committee has attempted to balance the needs of town departments with the wishes and means of Chichester taxpayers.

Through a process of reductions, postponements and shifts, the committee has attempted to produce a reasonable proposal.

The committee has proposed a sum of $6,016,566 for the 10-year period. Of this $3,439,164 represents the appropriations for the Road Advisory Committee.  $2,577,402 represents the balance of capital appropriations.  

2. The Capital Improvements Program (CIP)

A.      Brief Overview

State statute authorizes municipalities that have adopted a master plan to appoint a CIP committee “to prepare and amend a recommended program of municipal capital improvement projects projected over a period of at least 6 years.”  Chichester has adopted a master plan and, for the past several years, has appointed a CIP committee to recommend a program of capital improvement projects projected over a period of 10 years.

The primary purpose of the CIP is to aid the selectmen and the budget committee in their consideration of the annual budget.  In order to do this, the CIP must classify projects according to the urgency and need for realization and recommend a time sequence for their implementation.  The CIP must be based on information submitted by the departments and agencies of the municipality and shall take into account public facility needs indicated by the prospective development shown in the master plan of the municipality or as permitted by other municipal land use controls.

B.      Definitions

The statutes authorizing the CIP program, RSA 674:5-7, use various terms that share similar words.  These terms are not defined in the statutes.  Thus, in order to clarify the Committee’s role and to make the information contained in this report more accessible to the reader, the Committee has defined the terms in the above statutes as follows:

1.      Capital Improvements Program (“CIP”) – A recommended program of municipal capital improvement projects projected over a period of at least 6 years.

2.      Capital Improvement Project or Capital Project – Public projects undertaken by the town of Chichester, whether individually or cooperatively with other governmental entities, or undertaken by other governmental entities closely related to the town of Chichester, such as the school district.  Such projects must have a useful life of at least 5 years, cost at least $10,000, and must be generally non-recurring in nature.

A capital improvement project or capital project includes reasonable costs associated with planning, design, engineering, acquiring land, and other costs directly associated with the project.  However, capital improvement projects or capital projects do not include costs associated with the operation or maintenance of capital projects over time.  

A capital improvement project or capital project may include costs associated with the repair or replacement of capital projects if the repair or replacement either increases the capacity or level of services of the capital project or substantially extends the useful life of the capital project.

Examples of Capital Improvement Projects or Capital Projects include:

•     The construction and reconstruction of public infrastructure such as roads;
•     The purchase, lease, construction, rehabilitation, and replacement of public buildings and facilities;
•     The purchase or lease (including replacement) of major, heavy equipment such as fire trucks, dump trucks, loaders, etc.;
•     The acquisition or lease of land, or interest in land for public purposes.
•     Revaluation of property for municipal tax purposes.


3.      Capital Improvement – Unlike a “capital improvement project” or “capital project,” the term “capital improvement” is narrower in scope and is defined in the Chichester Zoning Ordinance.  See Town of Chichester, 2012 Zoning Ordinance, Section 3.13(B)(II-III) 

C.      Community Benefits

There are many significant community benefits that a CIP provides, including but not limited to:

•     Building facilities and increasing services that ensure the public health, safety, and welfare of the town’s citizens, a fundamental responsibility of local government. The CIP identifies and recognizes these needs as being of the highest order of priority;

•     Providing an informed decision-making process in which the public is invited and encouraged to participate. The CIP will make voters aware of proposed improvements that may be of particular interest and about major proposals that will likely come before future Town or School District Meetings;

•     Maintaining a stable property tax rate by avoiding untimely expenditures, which generate unstable property tax impacts.  Capital projects are forecasted within a flexible framework designed to distribute the tax burden attributable to capital expenditures over time;

•     Implementing our shared vision for the future of Chichester.  Successful community planning necessitates a series of incremental steps designed to implement our shared vision for the future.  The CIP provides a mechanism to translate community planning into a sustainable multi-year financial plan.

•     Saving costs and avoiding duplication of expenditures. Communication and coordination between departments and town and school officials is essential to avoid wasteful spending an duplication of expenditures;

•     Attracting investors of all kinds through planned stability, including homeowners, businesses, and lending institutions. Decisions to invest in Chichester may be influenced by improvements that enhance the quality of life for our citizenry, work force, and business owners. Capital improvement programming supports and complements broader community economic development objectives.

D.      CIP’s Limitations

It is equally important to understand the limitations of a CIP:

•     The CIP process is not a means to micro-manage the budget development process. Preparation of the Town and School District annual budgets is the responsibility of elected officials and professional administrators. The CIP is a tool designed to aid in the development and consideration of annual budgets.

•     The CIP does not allocate funding for “wish list” projects that are neither needed nor likely to receive public funding or support.

•     Although the program provides a framework to guide activity, the CIP is not rigid and inflexible. The CIP process cannot anticipate unusual changes in growth, economic conditions, political behavior, emergencies, non-tax revenue sources, and opportunities not predictable enough to schedule.

•     The CIP cannot be prepared in a vacuum. The CIP committee will continue to have representation and seek input from the Planning Board, Selectmen, Town, School District and general public. The CIP committee will solicit public comment on recommendations prior to their adoption.

        Although a recommended CIP should fit within reasonable fiscal constraints, it does not guarantee a level tax rate. There are many variables that determine the total tax rate (i.e., tax base, town and school district operating budgets, revenues, etc.). Capital expenditures constitute only a portion of total local spending.

3. Caveats Regarding Highway Projects

The Committee recognizes and thanks the Road Agent and the RAC for their diligent work to identify and prioritize several projects.  The committee feels that the message sent at town meeting in 2013-2016 from the voters in attendance is that they would like to have the roads repaired in the manner prescribed in the RAC report.  The committee felt it would be an exercise in futility and very short sighted of the committee to not fund the full amount requested by the RAC. Therefore the committee voted to include the full amount of the recommendation from the RAC based on previous Town Meeting Votes.   
4. Recommendations for 2017

The most immediate use of the Capital Improvement Program is for consideration by the Budget Committee, the Board of Selectmen, and the School Board as they prepare budgets and requests for funding projects for the upcoming year.

We recommend that the town appropriate $599,000 from 2017 taxes for the following projects and deposits into capital reserve funds (CRFs).

4.1 We recommend the deposit of $50,000 to the Fire Engine CFR to replace the 1997 E-One Fire Engine in 2020.

4.2 We recommend the deposit of $10,000 to the SCBA CRF, for SCBA replacement in 2018.

4.3 We recommend that the town deposit $25,000 to the Rescue Vehicle CFR to replace Rescue Vehicle 2 in 2019.

4.4 We recommend the appropriation of $300,000 to road reconstruction for 2017 in accordance with the recommendation of the Road Advisory Committee.  This recommendation is based on the fact that the majority of voters at the recent town meetings approved the full amount for road reconstruction.  

4.5 We recommend the appropriation of $190,000 to replace Highway Department’s 1997 Ford Plow Truck.

4.6 We recommend the use of $5,000 from Parks & Recreation Capital Reserve Fund for expenses related to Carpenter Park project.  

4.7 We recommend the appropriation from taxes $24,000 to provide the Town Library with a reconstructed and expanded parking lot.

4.8 We recommend the Select Board reinstate impact fees based on the influx of building permits during 2016 which volume increased both business and residential traffic and will impact services throughout our community.

4.9 We recommend to establish a Capital Reserve Fund for all Highway Department equipment including lease-purchase to better manage the overall budgeting process.

4.10 We recommend the Select Board re-establish a Space Needs Committee to study the feasibility of new town office facilities to meet future community needs.  

4.11 We recommend the Police Department participate in the CIP process as other departments do and submit to the CIP its vehicle and large purchase requests on an annual basis.

5. Estimating Future Costs

Inflation was considered when budgeting for the roads.  When budgeting for the roads we increased the allocation by 3% each year to account for inflation.  We are aware that 3% is higher than the Federal Reserve’s 2% target.  However, current inflation calculations do not account for energy costs at the level needed to construct a road.  Crude oil prices have outpaced inflation for the past decade or so.  We expect this trend to continue.  Since road construction is dependent on crude oil derivatives, we feel that 3% is justified.

Inflation was included in department submissions for vehicle costs.  In future years the effects of inflation will be clearer.  The need may arise for adjustments to our proposed budget during future years, or during the purchase years.  We expect departments to keep us informed of any relevant market trends as events unfold.  

We understand that future needs of departments may be uncertain. However, we would expect that our ten year recommendation is reflected in future budgets.  

6. Recommendations for 2017-2026

The Committee’s recommended projects and their costs for subsequent years are included in the attached spreadsheet. These projections and recommendations, however, will need to be revisited in the coming year as better information is made available to the Committee.
7. Leveling of Future Tax Burdens
One purpose of the CIP is to establish a relatively level tax burden for capital projects among future years. By leveling, it may be necessary to spread out the submitted capital projects so they are completed in a different years from the year originally proposed by department heads. This will in fact lessen the tax increase/decrease spikes that may be caused by the high cost of multiple capital improvements proposed for a given year.

8. Recommendations for Policy and Process Improvement

This was the eighth year for Chichester’s Capital Improvement Program Committee since the 2008 Town Meeting voted to establish a CIP Committee per RSA 674:5. We have learned much from our efforts and those of the town’s departments over these years. We believe that there are actions that should be taken by the Board of Selectmen, by the operating departments, and by this Committee to make next year’s CIP process easier and its results more defensible.
8.1 We recommend that the Board of Selectmen appoint members for next year’s committee as soon after this report is adopted as possible. The CIP Committee should operate as a year-round committee of five members. With a full year, the committee could work in a more collaborative manner with the department heads and allow for a more relaxed scheduling of its work.
8.3 As was done in previous years, after all proposed project information has been collected and compiled, the Board of Selectmen should invite the CIP Committee and all town department heads to discuss the aggregate cost of projects, their necessity and priority, and give guidance to the Committee on a maximum property tax requirement. This could be the culminating meeting of the series of quarterly meetings described above.
8.4 We continue to recommend that the departments submit information for any large anticipated projects or purchases beyond the 10 year period being studied in order to better help the CIP Committee project CRF needs and level tax impact year to year.
 
Appendix A: Descriptions of Projects/Purchases
(Listed in the same order they appear in Table 1 of this report.)

Town Revaluation Complete Measure and list 2018
•     Complete revaluation of all properties in town
•     Estimated cost $100,000 in 2018
•     Required by Dept of Revenue Administration RSA requirements

Fire Department Project Summaries

Fire Truck -2020
•     Replacement of 1997 Engine.  Consistent with 20 year life cycle (then 23 years old).
•     Projected cost $500,000 in 2020
•     The Committee recommends making deposits into the Fire Truck Capital Reserve Fund until 2019 and a purchase in 2020.

Rescue Vehicle # 2 – 2017
•     Replacement of 1988 rescue vehicle
•     Estimated cost $300,000
•     The committee recommends deposit of $25,000 to the Rescue Vehicle Capital Reserve Account in 2017.

Self-Contained Breathing Apparatus (SCBA) - 2018
•     Replacement of 40 cylinders
o       Federal mandated 15 year life.
•     Current equipment was purchased used in 2008
o       Equipment has 10 years of life remaining from 2008
•     Estimated cost in 2018 - $199,700
•     The committee recommends capital reserve deposits in the amount of $10,000 in 2017, with the remainder of the cost to be raised from taxation in 2018.

Fire Station Roof  - moved by committee from 2017 to 2023
•     Estimated cost $30,000

Finish pave safety building parking lot -2018 moved by committee to 2022
•     Omitted when building was completed in 1996 for cost savings.  Pavement is now becoming worn.
•     Estimated cost $18,625

Ambulance - 2023
•     Replacement of Ambulance purchased in 2008
•     Estimated life – 15 years
•     Estimated cost in 2015 – $250,000
•     CIP Committee recommends using the Ambulance User Special Revenue Account to pay for this project  
Highway Department Project Summaries

The committee recommends the adoption of the road reconstruction plan adopted by the RAC.  A vote of Town Meetings 2013-2016 made this decision for us.   Additionally, several more projects need to be adopted in future years:


Replace Plow Truck -2017, 2019, 2023
•     Estimated life 10 years
•     Estimated cost $190,000
•     The committee recommends the purchase of the vehicle outright in 2017 from taxation.  .  
•     Following this purchase, the next vehicle should be funded by CRF deposit of $30,000 each year.

Replace 1986 Grader -2018
•     Replace with similar newer model year grader
•     Estimated cost $130,000
•     $42,407 will be withdrawn from the heavy equipment capital reserve fund.  The remainder of the cost will come from taxation

Replace 2007 loader in 2020
•     Replace with a newer model year loader
•     Estimated cost $140,000
•     Cost to come from taxation



Parks, Recreation, and Conservation Project Summaries


Carpenter Park phase 2 – 2017
•     Relocate playground equipment & construct new natural playground area with amphitheater and common gathering area
•     Expansion of the pavilion
•     Establish a picnic area with tables & grills
•     Establish game courts
•     Landscape the park including a perimeter walking trail
•     Estimated cost in 2016 ~ $35,000 ~ minus $12,500 in donated labor/equipment/funds & minus $17,500 of grants the net cost from capital reserve withdrawal $5,000


Historical Society/Heritage Commission/Charrette Project Summary
•     Establish Capital Reserve Fund for Main Street Safety
•     Pedestrian Crosswalk on Main Street to ensure safety and help curb speed in this area  
•     Landscape the area to provide safe parking area environment including sidewalks and lighting
•     Deposit into CRF $25,000 in 2018
•     Estimated cost in 2019 ~ $40,000, minus CRF leaving $15,000 to be raised by taxes




Appendix B: State Law Regarding CIP

CHAPTER 674 :LOCAL LAND USE PLANNING AND REGULATORY POWERS
(Capital Improvements Program)

674:5 Authorization – In a municipality where the planning board has adopted a master plan, the local legislative body may authorize the planning board to prepare and amend a recommended program of municipal capital improvement projects projected over a period of at least 6 years. As an alternative, the legislative body may authorize the governing body of a municipality to appoint a capital improvement program committee, which shall include at least one member of the planning board and may include but not be limited to other members of the planning board, the budget committee, or the town or city governing body, to prepare and amend a recommended program of municipal capital improvement projects projected over a period of at least 6 years. The capital improvements program may encompass major projects being currently undertaken or future projects to be undertaken with federal, state, county and other public funds. The sole purpose and effect of the capital improvements program shall be to aid the mayor or selectmen and the budget committee in their consideration of the annual budget.

674:6 Purpose and Description – The capital improvements program shall classify projects according to the urgency and need for realization and shall recommend a time sequence for their implementation. The program may also contain the estimated cost of each project and indicate probable operating and maintenance costs and probable revenues, if any, as well as existing sources of funds or the need for additional sources of funds for the implementation and operation of each project. The program shall be based on information submitted by the departments and agencies of the municipality and shall take into account public facility needs indicated by the prospective development shown in the master plan of the municipality or as permitted by other municipal land use controls.


674:7 Preparation –
I. In preparing the capital improvements program, the planning board or the capital improvement program committee shall confer, in a manner deemed appropriate by the board or the committee, with the mayor or the board of selectmen, or the chief fiscal officer, the budget committee, other municipal officials and agencies, the school board or boards, and shall review the recommendations of the master plan in relation to the proposed capital improvements program.
        II. Whenever the planning board or the capital improvement program committee is authorized and directed to prepare a capital improvements program, every municipal department, authority or agency, and every affected school district board, department or agency, shall, upon request of the planning board or the capital improvement program committee, transmit to the board or committee a statement of all capital projects it proposes to undertake during the term of the program. The planning board or the capital improvement program committee shall study each proposed capital project, and shall advise and make recommendations to the department, authority, agency, or school district board, department or agency, concerning the relation of its project to the capital improvements program being prepared.

674:8 Consideration by Mayor and Budget Committee – Whenever the planning board or the capital improvement program committee has prepared a capital improvements program under RSA 674:7, it shall submit its recommendations for the current year to the mayor or selectmen and the budget committee, if one exists, for consideration as part of the annual budget.
Appendix C: Chichester Town Vote Regarding CIP
At the Town Meeting held on March 15, 2008, the town considered Warrant Article #36: “To see if the Town will authorize the board of Selectmen to establish a Capital Improvement Program Committee pursuant to RSA 674:5, which shall include at least one member of the Planning Board and may include but not limited to other member of the Planning Board, the budget Committee or the town governing body, to prepare and amend a recommended program of municipal capital improvement projects projected over a period of at least 6 years.”

The article passed on a voice vote.

For 2015, the Chichester Board of Selectmen appointed Matthew Cole, Ann Davis, Allen Mayville, and Darren Tapp to the committee.  

Appendix D: The CIP Cycle

Figure 3

The Capital Improvements Program, while serving as a common sense forecasting tool, must also be responsive to the uncertainties that are inherent in all aspects of community development. It is important that the program be reviewed on an annual basis to remain both proactive and practical. The elements of the annual review and amendment cycle are illustrated in Figure 3 and are briefly described below.

Review of Town and District Meetings - The annual review and update process begins in the spring of each year with a review of the decisions made at the respective Chichester Town and School District Meetings. This review examines the capital improvement related decisions that were acted upon by the voters.

Meetings with Project Sponsors - Throughout the balance of the spring, the committee meets with Boards, Commissions, Committees, Department Heads and others to discuss any updates to existing information, and to review and discuss any newly identified projects.

Formulation of CIP Recommendations -  In late summer, the committee receives any final updates, if any. By consensus the committee develops its recommendations for the ensuing program period.

CIP Public Hearing and Adoption -  The CIP Committee presents its recommended program to the Community at a public hearing. This is an opportunity for the public to comment on the draft CIP report prior to its final consideration and possible amendment by the CIP Committee. Once adopted, the CIP report is filed with the Town Clerk.

CIP and the Budget Process - The adopted CIP is forwarded to the Town Administrator, Board of Selectmen, Superintendent of Schools, School Board, and Budget Committee for their consideration as part of the budget development processes. As the respective entities hold their budget workshops and hearings, the public has additional opportunities to comment on capital improvements. One of the goals of the CIP is to recommend a stable program of improvements in terms of the associated tax rate impact. Although capital improvements represent a relatively small portion of Town and School appropriations, they can be easily targeted for budget reduction purposes. It is important that public officials consider needed capital expenditures within the context of the bigger spending picture. To the extent this is accomplished reasonably, tax rate stability can be achieved while decreasing the likelihood that action on needed capital improvements will be deferred.

Town and District Meeting - The two budget processes culminate with the consideration of budgets presented by the Board of Selectmen and the Chichester School Board at by the Town and District Meetings. It is at the Town and District Meetings where actual appropriations are made to fund capital improvements.

Public Participation - The people of Chichester have the opportunity to participate in the development of the program and to review and comment on the setting of community needs and priorities. The value of public participation lies not only in allowing the project beneficiaries and taxpayers to express their desires, but also in obtaining continued public support for future investments in our community.



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