Loading...
Resolution 1407RESOLUTION NO. 1407 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, ADOPTING THE CAPITAL ASSET POLICY AS ATTACHED HERETO. WHEREAS, the City of Edmonds is committed to the highest standards of responsible financial management; and WHEREAS, the City Council Finance Committee reviewed the Capital Asset Policy at the April 10, 2018 Finance Committee meeting; and WHEREAS, best practice shows that finance related policies should be formally adopted by Resolution; now therefore, THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. ADOPT THE CITY OF EDMONDS CAPITAL ASSET POLICY. The city council hereby adopts the following attached document: City of Edmonds Capital Asset Policy to read as set forth in Attachment A hereto, which is attached hereto and incorporated herein by this reference as if set forth in full. RESOLVED this 17TH day of April 2018. CIT IFED O I7 S MA OR, DAVE EARLING W� rumtam ' FILED WITH THE CITY CLERK: PASSED BY THE CITY COUNCIL: RESOLUTION NO. April 13, 2018 April 17, 2018 1407 1 Attachment A ��r�a.ifr"i r�"r+'L"r"v�ar.Z�ri�s`�a r r`e raaY■fr,�,��rar■i�'■rarv"r`r rRe a a'YaYiri'r�`arl Y. City of Edmonds,: F� c, r� .�F� l eK .� �•■��JLp �. r■r� w 11 �I�F�.� .i■Y■fA" �rRa i ■ ■■■ ��r ■'. �■ i■�rr■ O T\`■ ■ x a ■ .' i7 O iao �O ■ i Y ■ R■y� �ioR�i�R � R�r } .�. ■ �a iir +�.a'ln i rieyr�q �QR� i4 ��"R���/ ■ ■ ■ � • � r a r G tr a��� � rt7t.Y�yRq+,R�� � fV R��� :•r`,�`r�"�•a 'r'�i Rvirs`h'���yy�ra"t. Capital Asset Policy 12018 �`r"r ■ ia" r� r� Resolution # 1407 2 Attachment A 1.0 PURPOSE: To establish a Policy providing stewardship over the City's capital assets, as well as the capitalization and depreciation or amortization of capital purchases over time, as appropriate. 2.0 FUNDS AFFECTED: All City funds. 3.0 REFERENCES: RCW 43.09.200 Budgetary, Accounting, and Reporting System (BARS) Manual, Part 3, Chapter 3, Capital Assets Budgetary, Accounting, and Reporting System (BARS) Manual, Part Three, Chapter 7, Capital Assets and Internal Service Funds Office of Management and Budget, 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Office of Management and Budget, 2 CFR 225, Cost Principles for State, Local, and Indian Tribal Governments Edmonds City Code, Chapter 3 4.0 DEFINITIONS: 4.1 "Assets" — All land, buildings, improvements, infrastructure, permanent works of art and historic collections and equipment purchased, donated, constructed, or acquired by the City. 4.2 "Capital Assets" — Land and improvements to land, including right of ways and easements; permanent artwork and historic collections of any value; improvements and infrastructure; buildings, their furnishings, fixtures, and furniture; equipment, machinery, vehicles, and tools; intangible assets such as water rights, and computer software; with a value of $5,000 or more for non -infrastructure or $50,000 or more per item for infrastructure, and having a useful life exceeding one year from the date of acquisition. 4.3 "Control" — Being in charge of, and having the authority to manage the asset. Having custodial responsibility of the asset includes but is not limited to the caring, keeping, safeguarding and protecting the asset. 4.4 "Infrastructure" — Roads, bridges, water lines, sewers, and drainage systems. 4.5 "Small and Attractive Assets" — Assets that are particularly at risk or vulnerable to loss and cost less than the capitalization threshold of $5,000 and have a life expectancy of more than one year. Small and attractive assets are those that may Attachment A not be missed immediately if stolen, or may expose the City to liability if lost. Due to their sensitive nature, all guns that cost less than $5,000 are included in the definition of small and attractive assets, as well as all computer equipment that cost less than $5,000. Other assets are included in this definition only when their cost is greater than $1,000 but less than $5,000. Examples of these other assets include photographic equipment, tools, equipment, Unmanned Aircraft Systems (drones), and small machinery. 5.0 CAPITAL ASSET POLICY: 5.1 Capital Assets — General capital assets are those assets not specifically related to activities reported in the proprietary funds. The capital assets purchased or constructed by a governmental fund are recorded as expenditures in the fund at the time the related purchases are made; however, the associated capital assets are reported in the governmental activities column of the government -wide statement of net assets while not reported in the fund balance sheets. 5.2 The City classifies assets with an estimated useful life in excess of one year as capital assets. Land and works of art are capitalized at cost with no minimum threshold. Buildings, improvements, intangible assets, and machinery and equipment are capitalized when their cost meets or exceeds $5,000. Infrastructure assets are capitalized when their cost meets or exceeds $50,000. 5.3 Costs of normal maintenance and repair for assets are not capitalized. However, any improvement that increases an asset's value, capacity or materially extends its life is added to that asset's capitalized costs. 5.4 Equipment acquired through capital lease agreements and land purchased through conditional sales contracts are reported as general capital assets in the government - wide statement of net assets. In the governmental fund financial statements, lease and contract payments are reported as expenditures. 5.5 The City will complete an inventory of all capital assets no later than February 15th for the previous calendar year. Any adjustments to the Capital Asset List (e.g. additions, transfers, or disposals) must be communicated to the Finance Director no later than February 15th. The Finance Director must be notified immediately if it is discovered that any asset has been stolen, has been taken out of service, or has become impaired. Each department will maintain their own inventory of small and attractive assets and perform these same procedures to their small and attractive asset inventory. 4 Attachment A 5.6 In accordance with federal requirements, the City will specifically identify in its inventory any equipment or real property purchased with federal funds. The City will inventory all assets with a cost greater than $5,000 per unit purchased with federal funds at least once every two years, in accordance with 2 CFR 200.313. Upon completion of any Federal award, or when a capital asset is no longer needed and has been declared to be surplus, the appropriate federal agency will be contacted regarding the appropriate disposition of any assets that were purchased with federal funds. 5.7 All project costs related to the construction of any asset, including infrastructure, are included in construction in progress during the construction process and are capitalized upon completion of the project. These costs generally include amounts paid for work done by outside contractors, materials and supplies furnished by the City, labor of City employees, and project management costs. Some costs will be direct costs and readily assignable while some will be indirect costs, which should be allocated to benefited assets in a reasonable manner. Costs incurred during construction must be reported as Construction in Progress if construction has not been completed by year end. Once completed, the Construction in Progress asset is reclassified to the appropriate asset category, e.g. Buildings, Infrastructure, Sidewalks, or Machinery and Equipment. Long-range or advance planning costs and costs incurred to conduct feasibility studies or government compliance studies must be capitalized only when it can be shown that they provide benefits to existing or future capital assets. 5.8 The Construction in Progress schedule must be reviewed and reconciled no later than February 151h for the previous calendar year. The Finance Department will perform a secondary review of the reconciliation to ensure it is performed accurately and completely by reviewing documentation to confirm the date that assets were substantially complete. 5.9 Transfers of assets between departments or funds are allowed by mutual agreement of the departments. The department transferring the assets must notify the Finance Director of the transfer within thirty days of the transfer. 5.10 When a department decides to dispose of an asset in any manner, the department Director must notify the Finance Director and the City Council of their intent to dispose of the asset. In accordance with Edmonds City Code, any such sale or disposal must be approved by the City Council prior to disposal. 5.11 Capital assets acquired or constructed by the proprietary funds are capitalized in those funds at historical cost. Contributed assets are recorded at their estimated fair value as of the date acquired. The estimated value of donated assets is recorded as contributed capital by the fund which receives them. 5.12 Land and construction in progress are not depreciated. Buildings, equipment, non - building improvements and intangible assets are depreciated using the straight line method, using varying estimated service lives for individual assets and asset classifications depending on particular characteristics of an asset and factors 5 Attachment A surrounding its anticipated use. Depreciation is reported as part of the related program expense column on the government -wide statement of activities and as a fund expense in the proprietary funds, while not reported in the fund statements of governmental funds. Capital assets are reported net of accumulated depreciation on the government -wide statement of net assets and in the proprietary fund statement of net assets, while not reported in the governmental fund balance sheets. 5.13 Small and attractive assets should be identified and tracked by each Department Director or their designee using cost/benefit principles. The cost/benefit analysis should consider the cost of the item, its apparent susceptibility to loss or theft, and the likelihood of theft. Based on this analysis, the Director or designee shall prepare a list that is updated at least annually of the Department's small and attractive items, the asset's cost, its custodian, and its location. The Department shall conduct an inventory at least annually, no later than January 31 St, of the assets on the list. The list shall be retained by the Department according to State records retention requirements or completion of the relevant State audit, whichever is longer. Lost or missing assets must be immediately reported to the Finance Director. Finance Department staff may periodically audit these records at the discretion of the Finance Director. 5.14 The average service lives used to calculate depreciation for specific types of assets are summarized below: Asset Type Est. Service Life (Yrs) Buildings 30-50 Improvements other than Buildings 20-40 Furniture and Fixtures 5-10 Cars 5-10 Vans, Trucks, Trailers 5-20 Data Processing Equipment 3-10 Infrastructure 20-100 Sidewalks 30 Machinery and Equipment 5-20 Intangible Assets 20-30 0