Resolution 1422RESOLUTION NO. 1422
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EDMONDS,
WASHINGTON, ADOPTING THE CAPITAL ASSET POLICY AS ATTACHED
HERTO.
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
December 11, 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.
1. RESOLVED this 2„ d day of January 2019.
CITY OF EDMONDS
AYOR, D ARCING
AT
CLERK, SCO ASSEY
FILED WITH THE CITY CLERK: December 29, 2018
PASSED BY THE CITY COUNCIL: January 2, 2019
RESOLUTION NO. 1422
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Attachment A
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Capital As
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Resolution # 1422
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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, or $100,000 or more for repairs or replacements to
components of the Wastewater Treatment Plant, 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
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Attachment A
expectancy of more than one year. Small and attractive assets are those that may
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. Repairs or
replacements to components of the Wastewater Treatment Plant are capitalized
when their cost meets or exceeds $100,000.
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.
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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
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Attachment A
classifications depending on particular characteristics of an asset and factors
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 in accordance with the Small and Attractive Assets Policy.
5.14 The average service lives used to calculate depreciation for specific types of assets
are summarized below:
Asset Type
Buildings
Improvements other than Buildings
Furniture and Fixtures
Cars
Vans, Trucks, Trailers
Data Processing Equipment
Infrastructure
Sidewalks
Machinery and Equipment
Intangible Assets
Est. Service Life (Yrs)
30-50
20-40
5-10
5-10
5-20
3-10
20-100
30
5-20
20-30
C: