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City of Arden Hills, Minnesota Five-Year Capital Improvement Plan for Bond Issuance 2 I. INTRODUCTION In 2003, the Minnesota State Legislature adopted Minnesota Statutes, Section 475.521 (the “CIP Act”), which allows municipalities to issue bonds under a Capital Improvement Plan (the “CIP”) without a referendum requirement (except for the “reverse referendum” as described below). The CIP Act applies to specific capital improvements, including city halls, public works, and public safety facilities. The 2005 Legislature added towns to the meaning of a municipality, as well as libraries and town halls to the meaning of a capital improvements. Throughout this plan, the term “Capital Improvement” refers only to those improvements identified in the CIP Act, as summarized above. Capital expenditures for other public improvements in the City of Arden Hills, Minnesota (the “City”) will be financed through other means identified in their annual budgeting process and are not governed by this plan. II. PURPOSE A Capital Improvement, as defined in the CIP Act, is a major expenditure for the acquisition or betterment to public lands, buildings, or other improvements used as a city hall, town hall, library, public safety, or public works facility, any of which have a useful life greater than five years. For the purposes of the CIP Act, Capital Improvements do not include light rail transit or related activities, parks, road/bridges, administrative buildings other than a city or town hall, or lands for those facilities. As identified by the CIP Act, a CIP is a document designed to anticipate Capital Improvement expenditures over at least a five-year period so that they may be acquired, constructed, and/or installed in a cost-effective and efficient manner. The CIP must set forth the estimated schedule, timing, and details of specific Capital Improvements by year, together with the estimated cost, needs for improvement, and sources of revenue to pay for the improvement. The City believes the capital planning process is an essential element of responsible fiscal management and engages in adoption of an updated five-year plan for city- wide capital expenditures annually as part of its budgeting process. Major capital expenditures can be anticipated and coordinated to minimize potentially adverse financial impacts caused by the timing and magnitude of capital outlays. As potential expenditures are reviewed, the City considers the benefits, costs, alternatives, and impacts on operating expenditures. This coordination of capital expenditures is important to the City in achieving its goals of adequate physical assets and sound fiscal management.