Capital improvement projects are defined as improvement projects on an existing facility costing less than $2,500,000 or new construction projects costing less than $500,000. These projects are sometimes referred to as "Alterations, Repairs and Improvements" (AR&I). Capital improvement funds may not be used for program equipment or routine maintenance.
As per UCA 63A-5-104(7) capital improvements must be funded at 1.1% of the replacement value of existing buildings (or 0.9% during years of budget deficits) before any new capital development project can be approved. However, the Legislature amended statute to provide more flexibility during Fiscal Years 2009 through 2014.
Even though funding for capital improvements will increase annually due to inflation and new construction, these funds cannot keep pace with the annual requests for repairs and improvements. Nearly forty percent of Utah's facilities are over twenty-five years old and many have significant problems. One way some maintenance backlogs are eliminated, besides the use of capital improvement funds, is through renovations or replacements of older buildings. The Legislature has used capital development funds to replace aging and worn space that is contributing to the existing maintenance backlog. This helps the state's bond rating, and recognizes the fact that capital improvements alone cannot alleviate the maintenance backlog.
In the 2010 General Session the Legislature passed S.B. 189, "Capital Facilities Amendments," which allows the State Building Board to re-allocate bid savings and project residuals for approved capital improvement projects. This change allows funds that otherwise would be deposited in the Project Reserve Fund to be reallocated back to the Capital Improvements line item to be used on other critical improvement projects.
During the 2015 General Session, the Legislature appropriated for Fiscal Year 2016, $115,682,100 from all sources for Capital Improvements. This is a 14.9 percent increase from Fiscal Year 2015 revised estimated amounts from all sources. The total includes $115,682,100 from the General/Education Funds, an increase of 14.9 percent from revised Fiscal Year 2015 estimates.
In addition to statewide compensation and internal service fund cost increases, the following appropriation adjustments were made during the 2015 General Session:
As construction costs escalated from FY 2005 to 2008, so too did the replacement value of the state's buildings; which led to large funding increases in this line item. However, constrained state revenues in FY 2009 thru 2014 necessitated reductions in funding. In FY 2015 the Legislature funded 1.1% of the replacement cost of existing buildings.
COBI contains unaudited data as presented to the Legislature by state agencies at the time of publication. For audited financial data see the State of Utah's Comprehensive Annual Financial Reports.